ESI & PF liability on company director’s remuneration - payment yearly or one at one time?
From India, Kolkata
2From India, Kolkata
Dear Suman ji,
What I understood is, you want to ask whether PF and ESI attract on directors' remuneration? My answer to you is as under:
As regards to PF:
Directors on salary should also be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted for excluded employee with in the meaning under the Act.
Directors getting remuneration shall be excluded.
Partners shall be excluded.
Self employed (proprietor) if getting salary, is to be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted for excluded employee with in the meaning under the Act.
As regards to ESI:
In case MD or any director is paid monthly remuneration to carry out extra duties, he is treated as employee. He is counted for the number of persons for coverage. (SC in ESI v Apex Engineering 1997(77)FLR 878 and also Hq letter T-11/13/232/20/75-Ins IV dated 04.03.1998)
Partner is a owner of the business. Partner, if he is paid some remuneration for any special attention for which he devoted, their is no change in his status i.e.ownership and bring him within the definition of employee. (SC in ESI Trichura v Ramanuja Match Industry 1985(i) LLJ 69, 1985(66),FLR 108, AIR 1985 SC 278).
Partner looking after business for remuneration of certain percentage from net profit can not be treated as employee. (Mad HC in ESI v Ananda Silks Paradise 2008(119) 577, 2008 LLR 1243, 2008(4) LLN580, 2008(i) LLJ 275).
Partner of firm not employee (Ker HC in ESI v Arun Granites 2008(i) LLJ 211)
Self employed (proprietor) is excluded and not to be counted for number of person employed. ( ESI Hydrabad v Maharaja Bar & Rest. 56, FJR 279).
I request other members to make their comments.
From India, Mumbai
What I understood is, you want to ask whether PF and ESI attract on directors' remuneration? My answer to you is as under:
As regards to PF:
Directors on salary should also be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted for excluded employee with in the meaning under the Act.
Directors getting remuneration shall be excluded.
Partners shall be excluded.
Self employed (proprietor) if getting salary, is to be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted for excluded employee with in the meaning under the Act.
As regards to ESI:
In case MD or any director is paid monthly remuneration to carry out extra duties, he is treated as employee. He is counted for the number of persons for coverage. (SC in ESI v Apex Engineering 1997(77)FLR 878 and also Hq letter T-11/13/232/20/75-Ins IV dated 04.03.1998)
Partner is a owner of the business. Partner, if he is paid some remuneration for any special attention for which he devoted, their is no change in his status i.e.ownership and bring him within the definition of employee. (SC in ESI Trichura v Ramanuja Match Industry 1985(i) LLJ 69, 1985(66),FLR 108, AIR 1985 SC 278).
Partner looking after business for remuneration of certain percentage from net profit can not be treated as employee. (Mad HC in ESI v Ananda Silks Paradise 2008(119) 577, 2008 LLR 1243, 2008(4) LLN580, 2008(i) LLJ 275).
Partner of firm not employee (Ker HC in ESI v Arun Granites 2008(i) LLJ 211)
Self employed (proprietor) is excluded and not to be counted for number of person employed. ( ESI Hydrabad v Maharaja Bar & Rest. 56, FJR 279).
I request other members to make their comments.
From India, Mumbai
A Director of the Company is also an employee. In case the remuneration paid is withing the wage ceiling limit prescribed by the ESI Act, Contributions are definitely payable in respect of him. Now that you know the rule position, you have to make the remittance of the contributions on or before the 21st day of the ensuing month as in the case of the other employees. I as a Social Security Officer of the Corporation had pointed out such omissions in cases where the Director\'s Remuneration was within the Wage Ceiling Limit prescribed. You better register your such director immediately and make the remittances of contributions so that he can also avail all the benefits available under the Act.
MURTHY PSVSN
S.S.O (RETIRED)
HYDERABAD MOB. NO:9912808011
From India, Hyderabad
MURTHY PSVSN
S.S.O (RETIRED)
HYDERABAD MOB. NO:9912808011
From India, Hyderabad
Sir,
Please tell me pf deduction is compulsory for pvt ltd. company , if total no of employees 10 including 2 directors , one big company is demanding for pf deduction sheet from us ,we have worked with big company . please clarify us , it is urgently .
From India, New Delhi
Please tell me pf deduction is compulsory for pvt ltd. company , if total no of employees 10 including 2 directors , one big company is demanding for pf deduction sheet from us ,we have worked with big company . please clarify us , it is urgently .
From India, New Delhi
The criterion/provisions under EPF Act applies for both public & pvt. firms.
Registration under EPF Act is necessary for any unit having on roll 10 employees or 20 employees (without use of electric power) on any day during the year. Once registration is complete, you have to check who are covered as per salary/wage ceiling i.e.Rs.15000/-p.m., For those drawing above Rs.15000/p.m. this is optional. If the directors are drawing salary, if they are also working & treated as employees, they will also be covered under EPF subject to the ceiling. Your client co., will naturally insist for PF deduction details.
From India, Bangalore
Registration under EPF Act is necessary for any unit having on roll 10 employees or 20 employees (without use of electric power) on any day during the year. Once registration is complete, you have to check who are covered as per salary/wage ceiling i.e.Rs.15000/-p.m., For those drawing above Rs.15000/p.m. this is optional. If the directors are drawing salary, if they are also working & treated as employees, they will also be covered under EPF subject to the ceiling. Your client co., will naturally insist for PF deduction details.
From India, Bangalore
Dear All,
We've fixed a salary for one of our director. Its a private limited.
We need a breakup for Rs. 40,000 p.m without PF and ESI component.
Please clarify, what are breakup component needed.
Thank you,
Regards
Prakasam
From India, Chennai
We've fixed a salary for one of our director. Its a private limited.
We need a breakup for Rs. 40,000 p.m without PF and ESI component.
Please clarify, what are breakup component needed.
Thank you,
Regards
Prakasam
From India, Chennai
Hi Prakasam,
Pl.indicate -
1.Is it yours a partnership firm or a pvt.ltd Co?
2.Is he an employee?
3.Does he possess any shares of your firm and if yes what type. Have a share in firm's profit?
4.Does he entitled for any other perks like free use of office car, quarters, health insurance, mobile-wi-fi net & other benefits?
If he's to be considered to be an employee drawing salary, leaving other perks as above aside he can be fixed like:
1. Basic pay @ 40% of 40k
2. Dearness allw.@ 35% of 40k (if fixed DA commensurate with Basic pay & not linked to CPI or WPI as applicable for VDA)
3. City compensatory allowance @ 10% of 40k
4. Entertainment allw. @ 10% of 40k
5. Other allow.@ 5% of 40k
Assumptions: Conveyance & quarters, health insurance, children Edu.- office a/c
From India, Bangalore
Pl.indicate -
1.Is it yours a partnership firm or a pvt.ltd Co?
2.Is he an employee?
3.Does he possess any shares of your firm and if yes what type. Have a share in firm's profit?
4.Does he entitled for any other perks like free use of office car, quarters, health insurance, mobile-wi-fi net & other benefits?
If he's to be considered to be an employee drawing salary, leaving other perks as above aside he can be fixed like:
1. Basic pay @ 40% of 40k
2. Dearness allw.@ 35% of 40k (if fixed DA commensurate with Basic pay & not linked to CPI or WPI as applicable for VDA)
3. City compensatory allowance @ 10% of 40k
4. Entertainment allw. @ 10% of 40k
5. Other allow.@ 5% of 40k
Assumptions: Conveyance & quarters, health insurance, children Edu.- office a/c
From India, Bangalore
Dear Kumar,
Thank you for the response.
Here is the answer for the questions asked by you.
1. It's a private ltd company.
2. No. Supporting the Administration and development of the company.
3. Yes he is possessing the shares of the company and firm's profit.
4. No
Thank you
Regards,
Prakasam
From India, Chennai
Thank you for the response.
Here is the answer for the questions asked by you.
1. It's a private ltd company.
2. No. Supporting the Administration and development of the company.
3. Yes he is possessing the shares of the company and firm's profit.
4. No
Thank you
Regards,
Prakasam
From India, Chennai
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