Hi, I rented my business (premises + operations) to an individual. Please advice who will have the liability to pay the EPF during the tenure. Can I surrender my EPF Company Code on this basis?
From India, Kurud
From India, Kurud
If you have not surrendered the PF registration, the liability will fall on you because you are the employer as per PF records. Therefore, if you have no intention of starting/ resuming the operations by your own, then you may surrender the RC. But before doing so, please take a second opinion because getting a registration in future will be very difficult. This applies to ESI, Commercial Tax, Central Excise and other registrations also.
Madhu.T.K
From India, Kannur
4240Madhu.T.K
From India, Kannur
You say you have leased your premises and operations. Exactly what does that mean ?
Have you sold your business? Or is somebody running it for you on a profit-sharing basis?
Are the employee is still employed by you or have they been transferred to the new person? How have these matters been closed? Who is paying their salaries ?
The answer to your question will depend on various factors. If you give the complete details of what exactly you have done, the past and current before, then we can come up with a proper answer
From India, Mumbai
Have you sold your business? Or is somebody running it for you on a profit-sharing basis?
Are the employee is still employed by you or have they been transferred to the new person? How have these matters been closed? Who is paying their salaries ?
The answer to your question will depend on various factors. If you give the complete details of what exactly you have done, the past and current before, then we can come up with a proper answer
From India, Mumbai
Hi experts,
I have leased/rented it. I do not get profit sharing but a fixed rent. Employees salary will be paid by tenant. No, I have not sold my business, I have let the tenant use, operate & earn.
I do not have plans of taking over the business again. If I have no tenant, I will close it. In addition, the firm will never have more then 5 employees. We used to have 5 employees earlier when the minimum employee count applicability clause was 5.
From India, Kurud
I have leased/rented it. I do not get profit sharing but a fixed rent. Employees salary will be paid by tenant. No, I have not sold my business, I have let the tenant use, operate & earn.
I do not have plans of taking over the business again. If I have no tenant, I will close it. In addition, the firm will never have more then 5 employees. We used to have 5 employees earlier when the minimum employee count applicability clause was 5.
From India, Kurud
Once covered by PF (and other Acts) you will continue to be covered irrespective of the number of employees employed. If you do not surrender your registration, the liability will come to you only. Moreover, the tenant who takes over the show will be undertaking a liability like PF even though he is not supposed to have it with such a less number of employees. Therefore, before signing the agreement, you may ensure that the RC is cancelled and no liability exists on it.
Madhu.T.K
From India, Kannur
Madhu.T.K
From India, Kannur
Dear Mr. Brij,
What you needs to do is as under :
1. You have to close your business activities, surrender the applicable licenses like, shop/factory act licenses,l food license etc.
2. You should inform EPFO about the closure of business and cancel the EPF registration.
3. You give the Premises [ and not the operations] on Leave and License and enjoy the
License fees/rent.
4. Try to avoid the name or brand if any to the new business activity would be placed by
Licensee / tenant.
5. If Licensees business coverable under the EPFO it will be a sole responsibility of the Licensee and as a Owner of the Premises it does not comes to you, rather further liability of any of the Licensee towards EPFO would not be comes to you.
YOU NEEDS TO GO BY ALL LEGAL STEPS AND DON't WORRY.
Pramod Thakar
Pune 9822435423
From India, Pune
What you needs to do is as under :
1. You have to close your business activities, surrender the applicable licenses like, shop/factory act licenses,l food license etc.
2. You should inform EPFO about the closure of business and cancel the EPF registration.
3. You give the Premises [ and not the operations] on Leave and License and enjoy the
License fees/rent.
4. Try to avoid the name or brand if any to the new business activity would be placed by
Licensee / tenant.
5. If Licensees business coverable under the EPFO it will be a sole responsibility of the Licensee and as a Owner of the Premises it does not comes to you, rather further liability of any of the Licensee towards EPFO would not be comes to you.
YOU NEEDS TO GO BY ALL LEGAL STEPS AND DON't WORRY.
Pramod Thakar
Pune 9822435423
From India, Pune
Hello Madhu Sir, Thanks for information. My question is, can I surrender my RC on the basis that I am going to rent out? If yes, what would be the process?
From India, Kurud
From India, Kurud
You can surrender the RC. Meet your Enforcement Officer and take advice from him. You have to submit the returns till date and get no dues certificate from the Officer. This may take time. Alternatively, you can ask the tenant to continue the PF registration but should get form 5A in his name. Form 5F is a return of ownership in which the name of the person responsible for payment of contribution and who can be convicted in case of failure to pay the contribution will be mentioned. Please take the advise of your PF Enforcement Officer in this regard.
Madhu.T.K
From India, Kannur
Madhu.T.K
From India, Kannur
your post does not make sense from the accounting and legal stand point.
probably its a question of using words that make sense to you but not to others.
you have leased / rented out your business.
Well that is not possible. There is no such concept. You have perhaps rented out your office / shop. You can not rent out your business as such. If someone is running your business for you, then you have a management / commission with him. In that case, you will be actually liable for everything and the payment should be made by or on your behalf.
If on the other hand, the person is running the business in his own name, then you have sold your business to him. You may have received no lumpsum consideration, or you may have a royalty from the business, but the business probably no longer belongs to you. The answer can be given only after seeing the agreement. Probably a calling point is - if you want the business back can he refuse to give it back ? Or if he stops paying you "rent", can he continue to operate the business or can you stop him (note, i am not talking of rent for the premises)
The answer of your question depends on the above.
If you are still owning the business, someone running it, the agreement of who is liable is only restricted between your self. the government and statutory authorities only recognise you as liable. the payment of statutory dues also must be made strictly in your name.
If you no longer own the business then you can close all the registrations, expect any tax registrations in your personal name that apply even otherwise.
quote :
Hi experts,
I have leased/rented it. I do not get profit sharing but a fixed rent. Employees salary will be paid by tenant. No, I have not sold my business, I have let the tenant use, operate & earn.
I do not have plans of taking over the business again. If I have no tenant, I will close it. In addition, the firm will never have more then 5 employees. We used to have 5 employees earlier when the minimum employee count applicability clause was 5.
From India, Mumbai
probably its a question of using words that make sense to you but not to others.
you have leased / rented out your business.
Well that is not possible. There is no such concept. You have perhaps rented out your office / shop. You can not rent out your business as such. If someone is running your business for you, then you have a management / commission with him. In that case, you will be actually liable for everything and the payment should be made by or on your behalf.
If on the other hand, the person is running the business in his own name, then you have sold your business to him. You may have received no lumpsum consideration, or you may have a royalty from the business, but the business probably no longer belongs to you. The answer can be given only after seeing the agreement. Probably a calling point is - if you want the business back can he refuse to give it back ? Or if he stops paying you "rent", can he continue to operate the business or can you stop him (note, i am not talking of rent for the premises)
The answer of your question depends on the above.
If you are still owning the business, someone running it, the agreement of who is liable is only restricted between your self. the government and statutory authorities only recognise you as liable. the payment of statutory dues also must be made strictly in your name.
If you no longer own the business then you can close all the registrations, expect any tax registrations in your personal name that apply even otherwise.
quote :
Hi experts,
I have leased/rented it. I do not get profit sharing but a fixed rent. Employees salary will be paid by tenant. No, I have not sold my business, I have let the tenant use, operate & earn.
I do not have plans of taking over the business again. If I have no tenant, I will close it. In addition, the firm will never have more then 5 employees. We used to have 5 employees earlier when the minimum employee count applicability clause was 5.
From India, Mumbai
Hi Experts,
Promod sir, thank for detailed steps for closure. I will definitely need this at certain point.
Saswata sir, thanks for elaborated advise. My scenario falls under - my business+premise is operated by someone else & I get fixed royalty/rent. He is using my license. So, as you said, the liability will be on me.
Madhu sir, thanks for your advise. I will still consult with Enforcement Officer & check the scenario. If he does not accept surrender, I will change Form 5A & have tenants name on it.
From India, Kurud
Promod sir, thank for detailed steps for closure. I will definitely need this at certain point.
Saswata sir, thanks for elaborated advise. My scenario falls under - my business+premise is operated by someone else & I get fixed royalty/rent. He is using my license. So, as you said, the liability will be on me.
Madhu sir, thanks for your advise. I will still consult with Enforcement Officer & check the scenario. If he does not accept surrender, I will change Form 5A & have tenants name on it.
From India, Kurud
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HC All - Trainees not covered for PF -2010.pdf
PF Ledger.xls