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Components of ESI Calculation.

Former Member
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Hi Gurus,

Kindly please let me know the detailed components of ESI Calculation and let me know on wat basis ESI is calculated.

Regards

AM.

Accepted Solutions (0)

Answers (3)

Answers (3)

Former Member
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Hi

ESI will be calucualte on gross pay

Basis for ESI valuation is /101 Wagetype

Warm Regards

Former Member
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thanx

sikindar_a
Active Contributor
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Maintain ESI Eligibility Limit

In this activity, you can set up the values of the ESI Eligibility Limit Constant (ESILT) and Min.Avg.Wage per day Constant (ESIMN) of the table view Payroll Constants (V_T511P). These values are set by the government. You must change the value of these constants only in case of legal changes.

An employee is eligible for ESI only if the ESI Basis of the employee is less than or equal to the amount stored in the ESI Eligibility Limit Constant (ESILT). Both, employee and employer contributions are made in this case.

If the average wage per day of the employee is less than or equal to the amount stored in the Min.Avg.Wage per day Constant (ESIMN) of the table view Payroll Constants (V_T511P), only the employer makes an ESI contribution of 4.75% of the ESI Basis.

Example

In 1999 the ESI eligibility limit was Rs.6500.

All employees with an ESI Basis less than or equal to Rs.6500 are eligible for this benefit.

An employee was a beneficiary of the ESI scheme in 1998 as his ESI basis was Rs.6,200. When the salary of the employee was revised in February 1999, the ESI basis of the employee was Rs.6800. The employee was not eligible for the benefit of ESI because of the increment in salary, but continues to contribute to ESI until the contribution period lapses.

The Government of India has stipulated half-yearly contribution periods, namely, April to September and October to March. Hence, the employee continues to contribute to ESI until March 1999.

Requirements

The eligibility limits entered must coincide with the amount stipulated by the ESI Act.

Recommendation

To change the value of the constant, SAP recommends that you delimit the validity dates of the existing record and create a new record.

Activities

1. Enter the Start Date.

2. Enter the End Date.

3. Enter the Value.

4. Save the entries.

Maintain Number of Working Days in a Month

Use

In this activity, you can maintain the value of the No.of days in month for calc Constant (DYSMN) of table view Payroll Constants (V_T511K).

The value of this constant is used to calculate the Average wage per day for an employee. Average wage per day for an employee is the value of ESI Basis Nominal Wage Type (/113) divided by the value in this constant.

Average wage per day for an employee is used to determine the eligibility of employee ESI contribution.

Requirements

To change the value of the constant, SAP recommends that you delimit the validity dates of the existing record and create a new record.

Activities

1. Enter the Start Date.

2. Enter the End Date.

3. Enter the Value.

4. Save the entries.

Define Personnel Area and Subarea Groupings for ESI

In this activity, you define the personnel area and subarea groupings for Employees' State Insurance (ESI) which are used to group all personnel areas and subareas that have the same ESI reference number.

Activities

1. Enter an alphanumeric value for the group name in the PS grp. for ESI field.

2. Enter the employers reference number in the Empr Ref. field.

3. Enter the ESI local office address in the ESI Off field by clicking on the address button on the toolbar.

4. Enter a description in the ESI Text field.

5. Save your entries.

Further notes

Maintain Contribution Rates for ESI

In this activity, you assign employee and the employer contribution rates to the personnel area and subarea groupings for ESI. These rates are valid for the time period specified and may vary depending on the respective state laws.

Example

Multimode Pvt. Ltd. has a branch each in Orissa and Kerala. Orissa and Kerala belong to the following personnel areas and subareas:

Branch Personnel area Personnel subarea Grouping for ESI

Orissa IN01 OR01 E1

Kerala IN01 KR01 E2

E1 is the personnel area and subarea grouping for ESI for Orissa and E2 is the grouping for Kerala.

The employer and employee's contributions changed in the period 01.04.2000 to 31.04.2009 as the Orissa state laws changed, but the contribution rates remained the same for Kerala in the same period.

PS grp.for ESI EmployersContrib. EmployeesContrib. Start date End date

E1 4,75 1,75 01.04.1999 31.03.2000

E1 5,75 1,5 01.04.2000 31.04.2009

E2 4,75 1,75 01.04.1999 31.03.2009

Activities

1. Enter the personnel area and subarea grouping for ESI in the PS grp. ESI field.

2. Enter the employee contribution rate in the Empe.cont field.

3. Enter the employer contribution rate in the Empr.co field.

4. Enter the start and end dates for the period .

5. Save your entries