goodwork

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kaushal vijaywargiya (Querist)
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14 September 2010 Sir
we are paying goodwork to employee and worker in this case will i have to pay esis or not pls tell me all employee gross salry is above on 15000

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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19 September 2010 your query is not clear, please explain

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2024 Goodwork, in the context you're referring to, seems to be a payment or allowance provided to employees. Whether you need to pay Employee State Insurance (ESI) contributions on this payment depends on various factors, including the nature of the payment and the gross salary of the employees.

Here's a detailed explanation:

### **1. Understanding ESI Contribution:**

**Employee State Insurance (ESI)** is a social security scheme provided by the Government of India that offers medical, monetary, and other benefits to employees. The ESI Act mandates contributions from both employees and employers.

### **2. ESI Contribution Requirements:**

**a. **Threshold for ESI Contributions**:
- **Employee's Gross Salary Limit**: As per the ESI Act, ESI contributions are applicable if the employee's gross monthly salary is up to ₹21K (or ₹25K for employees with disabilities) as of the latest updates. Employees earning above this limit are not covered under ESI.

**b. **Nature of Payment**:
- **Goodwork Payment**: If the payment classified as "goodwork" is a part of the employee's salary or remuneration and is included in the gross salary, it would be subject to ESI contributions if the total gross salary (including this payment) is ₹21K or less.
- **Non-Salary Payments**: If the "goodwork" payment is a separate allowance or incentive and is not included in the gross salary calculation, it would not impact the ESI eligibility directly, but it's essential to ensure that the total gross salary does not exceed the ESI limit for eligibility.

### **3. Practical Application:**

- **Employee's Gross Salary**: If every employee’s gross salary, including the "goodwork" payment, exceeds ₹15K, they are not covered by ESI.
- **If Salary Is Below ₹21K**: If the gross salary including the "goodwork" payment is below ₹21K, ESI contributions would be required.

### **4. Calculation of ESI Contributions:**

If ESI is applicable, the contributions are calculated as follows:

- **Employee's Contribution**: 0.75% of the gross salary.
- **Employer's Contribution**: 3.25% of the gross salary.

### **5. Example Calculation:**

- **Gross Salary Including Goodwork**: ₹18,000 (below the ESI threshold of ₹21K).
- **ESI Contribution**:
- **Employee's Share**: ₹18K × 0.75% = ₹135
- **Employer's Share**: ₹18K × 3.25% = ₹585

**Total ESI Contribution**: ₹135 (Employee) + ₹585 (Employer) = ₹720

### **Compliance:**

Ensure that all calculations and contributions are accurate and adhere to the latest regulations. Regularly check for any updates to the ESI limits and contribution rates.

### **Summary**

- **If the gross salary (including "goodwork" payments) is below ₹21K**, ESI contributions are mandatory.
- **If the gross salary exceeds ₹21K**, ESI contributions are not required.

Ensure you comply with the latest ESI regulations and maintain proper records for audits and compliance purposes. If you have further specific queries or need assistance with calculations, consulting with a payroll expert or an ESI professional would be advisable.

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