How do you calculate EIS,KWSP & Tax contribution in your payslip. Payslip are an essential part of any employee's financial record. They provide a breakdown of earnings, deductions, and other important information related to an employee's salary.
1. Employment Insurance System (EIS):
The Employment Insurance System (EIS) is a social security scheme implemented in certain countries to provide financial assistance to employees who have lost their jobs. EIS contributions are typically calculated as a percentage of an employee's monthly wages, subject to a maximum wage limit set by the government. The employer and employee usually share the contribution, with each party contributing an equal amount.
To calculate EIS deductions, follow these steps:
Determine the applicable EIS contribution rate set by the government.
Calculate the EIS contribution amount by multiplying the contribution rate by the employee's monthly wage.
Split the EIS contribution equally between the employer and the employee.
EIS Deduction = Monthly Wage * EIS Contribution Rate
2. Employees Provident Fund (KWSP):
The Employees Provident Fund (KWSP) is a mandatory retirement savings scheme. It serves as a long-term savings plan for employees, ensuring financial security during retirement. KWSP contributions are based on a fixed percentage of an employee's monthly wages, subject to an upper wage limit.
To calculate KWSP deductions, follow these steps:
Determine the KWSP contribution rate applicable to the employee's age and salary range.
Calculate the KWSP contribution amount by multiplying the contribution rate by the employee's monthly wage.
Income tax is a compulsory deduction levied by the government on an individual's income. The amount of tax deducted from an employee's salary depends on their income level and the prevailing tax rates set by the government. Employers are responsible for withholding the necessary tax amount from an employee's salary.
To calculate income tax deductions, follow these steps:
Determine the applicable tax brackets and rates based on the employee's income level.
Calculate the tax amount by applying the corresponding tax rate to the employee's taxable income.
