Dear Apurba Mitra,
Greetings for the day.
Yes, it is mandatory to deduct ESIC from the contractor payment, but not on the whole bill. Only a part, i.e., labor charges, should be deducted. If there are no labor charges mentioned in the bill, 60% of the total bill amount should be considered as labor charges, and 6.5% of that 60% should be deducted and deposited with ESIC via challan. The circular on this matter is enclosed for reference.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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280Greetings for the day.
Yes, it is mandatory to deduct ESIC from the contractor payment, but not on the whole bill. Only a part, i.e., labor charges, should be deducted. If there are no labor charges mentioned in the bill, 60% of the total bill amount should be considered as labor charges, and 6.5% of that 60% should be deducted and deposited with ESIC via challan. The circular on this matter is enclosed for reference.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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Apurba needs to read the document mentioned and notice in full and then figure out where they stand. From what I understand, probably option F or G applies, and therefore the company is not liable to pay ESIC.
From India, Mumbai
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From India, Mumbai
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Dear all,
As already conveyed, job work done outside the factory or establishment premises through a factory or establishment engaging fewer than 10 or 20 employees, which are not independently coverable, and where no supervision is exercised by those undertaking the work for more than one employer, the employees of such job contractors are not covered under the provisions of the act, and as such, no contribution is payable.
P K Sharma
From India, Delhi
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As already conveyed, job work done outside the factory or establishment premises through a factory or establishment engaging fewer than 10 or 20 employees, which are not independently coverable, and where no supervision is exercised by those undertaking the work for more than one employer, the employees of such job contractors are not covered under the provisions of the act, and as such, no contribution is payable.
P K Sharma
From India, Delhi
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Dear Apurba,
In case the "contractor" is supplying your organization with finished/semi-finished materials, why do you wish to cover him under ESI? He is working in a remote location outside your premises and with no day-to-day supervision from your organization. He should only be treated as a "Supplier" and should bill for the materials supplied. He will be governed by the prevailing tax laws.
Take care,
Sourav Mukherjee
From India, Bangalore
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In case the "contractor" is supplying your organization with finished/semi-finished materials, why do you wish to cover him under ESI? He is working in a remote location outside your premises and with no day-to-day supervision from your organization. He should only be treated as a "Supplier" and should bill for the materials supplied. He will be governed by the prevailing tax laws.
Take care,
Sourav Mukherjee
From India, Bangalore
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Hi APURBA,
I agree with Saswatabanerjee because on a contract basis, they are supplying only finished goods to your end, not employees. Therefore, they will be considered as a vendor. They are not supplying an employee to your company, so there is no need to pay ESI for them.
From India, Bangalore
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I agree with Saswatabanerjee because on a contract basis, they are supplying only finished goods to your end, not employees. Therefore, they will be considered as a vendor. They are not supplying an employee to your company, so there is no need to pay ESI for them.
From India, Bangalore
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ESI deduction.doc
ESI contribution rates lowering.pdf