In this article we discuss about the items to be included in gross salary and items is not included in the gross salary for calculation of ESIC contribution. The following items to be considered for calculation of ESIC Gross salary: –

S. No.To be Included in WagesS. No.Not to be included in Wages
1Basic Pay1Sum paid to defray special expenses
2Dearness Allowance2Gratuity payable on discharge
3House rent allowance3Pay in lieu of notice retrenchment
4City compensatory allowance4Benefits paid under the ESI Scheme
5Overtime allowances will be considered as wage for the purpose of charging the contribution only and will not be considered for the purpose of the coverage of the employee under the Scheme5Encashment of leave Encashment
6Annual Bonus, Incentive Bonus, Production Bonus, Attendance Bonus provided the periodicity of the payment is not more than 2 months6Payment of Inam which does mean part of employment
7Nightshift allowance7Washing allowance
8Children education allowance8Conveyance amount towards reimbursement for duty related journey
9 Heat, Gas & Dust allowance9Annual Commission
10Suspension Allowance/Subsistence Allowance paid to the suspended employee10Service charges are collected by management of the hotel on behalf of their employees in lieu of direct tips and the same is paid to their employees at a later date
11Wages Paid During Layoff11Exgratia Payment During Strike for Travelling Expenses
12Conveyance Allowance except reimbursement allowance12Saving Scheme for the welfare of the workers
13Medical allowance in lieu of medical aid/reimbursement of medical expenses. Where such payments are made by the employer in lieu of the medical benefit.
14Newspapers allowance instead of reimbursement of the cost of the Newspapers
15Education allowance instead of reimbursement of the cost of the education
16Drivers Allowance
17Food/Milk/Tiffin/Lunch Allowance:- Paid in cash at fixed rate irrespective of whether the person is absent or on authorised leave etc13Food/Milk/Tiffin/Lunch Allowance:-
a. Paid in cash with deduction for leave or absence etc.
b. Paid in kind i.e. canteen subsidy/food subsidy etc.
18Gazetted Allowance
19Wages and Dearness Allowance for Unsubstituted Holidays
20Interim Relief normally paid when either the wage is under revision or when the payment of Dearness Allowance is delayed due to any reason