ESI & PF liability on company director’s remuneration - payment yearly or one at one time?
From India, Kolkata
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2From India, Kolkata
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Your question is not clear What exactly do you need to know ?
From India, Mumbai
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From India, Mumbai
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Dear Suman ji,
What I understood is, you want to ask whether PF and ESI apply to directors' remuneration? My answer to you is as follows:
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 employees within the meaning of the Act.
Directors receiving remuneration shall be excluded.
Partners shall be excluded.
Self-employed (proprietor) if receiving a salary, should be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted as an excluded employee within the meaning of the Act.
As regards to ESI:
In case the MD or any director is paid a monthly remuneration to carry out extra duties, he is treated as an employee. He is counted in 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).
A partner is an owner of the business. If a partner is paid some remuneration for any special attention for which he devoted, there is no change in his status i.e. ownership, and it brings him within the definition of an employee (SC in ESI Trichurav Ramanuja Match Industry 1985(i) LLJ 69, 1985(66), FLR 108, AIR 1985 SC 278).
A partner looking after business for remuneration of a certain percentage from net profit cannot be treated as an employee (Mad HC in ESI v Ananda Silks Paradise 2008(119) 577, 2008 LLR 1243, 2008(4) LLN580, 2008(i) LLJ 275).
A partner of a firm is not an employee (Ker HC in ESI v Arun Granites 2008(i) LLJ 211).
Self-employed (proprietor) is excluded and should not be counted in the number of persons employed (ESI Hyderabad v Maharaja Bar & Rest. 56, FJR 279).
I request other members to share their comments.
From India, Mumbai
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What I understood is, you want to ask whether PF and ESI apply to directors' remuneration? My answer to you is as follows:
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 employees within the meaning of the Act.
Directors receiving remuneration shall be excluded.
Partners shall be excluded.
Self-employed (proprietor) if receiving a salary, should be counted for computation of employees for coverage. Deduction towards PF can be made if he is not opted as an excluded employee within the meaning of the Act.
As regards to ESI:
In case the MD or any director is paid a monthly remuneration to carry out extra duties, he is treated as an employee. He is counted in 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).
A partner is an owner of the business. If a partner is paid some remuneration for any special attention for which he devoted, there is no change in his status i.e. ownership, and it brings him within the definition of an employee (SC in ESI Trichurav Ramanuja Match Industry 1985(i) LLJ 69, 1985(66), FLR 108, AIR 1985 SC 278).
A partner looking after business for remuneration of a certain percentage from net profit cannot be treated as an employee (Mad HC in ESI v Ananda Silks Paradise 2008(119) 577, 2008 LLR 1243, 2008(4) LLN580, 2008(i) LLJ 275).
A partner of a firm is not an employee (Ker HC in ESI v Arun Granites 2008(i) LLJ 211).
Self-employed (proprietor) is excluded and should not be counted in the number of persons employed (ESI Hyderabad v Maharaja Bar & Rest. 56, FJR 279).
I request other members to share their comments.
From India, Mumbai
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(Fact Checked)-The user's reply contains accurate information regarding the applicability of PF and ESI on directors' remuneration, citing relevant Supreme Court decisions and interpretations. Well done! (1 Acknowledge point)
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A Director of the Company is also an employee. In case the remuneration paid is within 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
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MURTHY PSVSN
S.S.O (RETIRED)
HYDERABAD
MOB. NO: 9912808011
From India, Hyderabad
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(Fact Checked)-The user's reply contains accurate information regarding the liability of ESI and PF contributions on a company director's remuneration if it falls within the wage ceiling limit prescribed by the ESI Act. The user correctly emphasizes the need to make timely remittances for such contributions to ensure the director can avail benefits under the Act. (1 Acknowledge point)
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any notification regarding this point
From India, Jaipur
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From India, Jaipur
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(Fact Check Failed/Partial)-The user reply lacks information. The Employees' State Insurance Act, 1948, and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 mandate monthly ESI and PF contributions on the director's remuneration.
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Sir,
Please tell me if PF deduction is compulsory for a private limited company. We have a total of 10 employees, including 2 directors. A large company is requesting a PF deduction sheet from us as we have worked with them. Could you please clarify if this is necessary? Your prompt response is greatly appreciated.
Thank you.
From India, New Delhi
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Please tell me if PF deduction is compulsory for a private limited company. We have a total of 10 employees, including 2 directors. A large company is requesting a PF deduction sheet from us as we have worked with them. Could you please clarify if this is necessary? Your prompt response is greatly appreciated.
Thank you.
From India, New Delhi
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(Fact Checked)-The PF deduction is mandatory for all eligible employees in a Pvt Ltd. company, including directors. You should comply with the big company's request. Thank you for seeking clarification on this important matter. (1 Acknowledge point)
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The criteria/provisions under the EPF Act apply to both public and private firms. Registration under the EPF Act is necessary for any unit having ten employees on the payroll or twenty employees (without the use of electric power) on any day during the year. Once registration is complete, you have to check who is covered as per the salary/wage ceiling, i.e., Rs. 15,000/- per month. For those earning above Rs. 15,000 per month, this is optional.
If the directors are drawing a salary and are also working and treated as employees, they will also be covered under EPF subject to the ceiling. Your client company will naturally insist on details regarding PF deductions.
From India, Bangalore
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If the directors are drawing a salary and are also working and treated as employees, they will also be covered under EPF subject to the ceiling. Your client company will naturally insist on details regarding PF deductions.
From India, Bangalore
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(Fact Checked)-The user reply contains accurate information regarding EPF Act provisions for employee coverage and salary ceilings. Directors' coverage under EPF is subject to the salary ceiling. (1 Acknowledge point)
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Dear All,
We've fixed a salary for one of our directors. It's a private limited company. We need a breakup for Rs. 40,000 per month without the PF and ESI components. Please clarify which breakup components are needed.
Thank you.
Regards,
Prakasam
From India, Chennai
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We've fixed a salary for one of our directors. It's a private limited company. We need a breakup for Rs. 40,000 per month without the PF and ESI components. Please clarify which breakup components are needed.
Thank you.
Regards,
Prakasam
From India, Chennai
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(Fact Check Failed/Partial)-The Director's salary should include PF and ESI components. Both are mandatory for employees earning up to Rs. 15,000. Ensure compliance with relevant laws. Thank you for seeking clarification!
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Hi Prakasam,
Please indicate the following:
1. Is it a partnership firm or a private limited company?
2. Is he an employee?
3. Does he possess any shares of your firm, and if yes, what type? Does he have a share in the firm's profits?
4. Is he entitled to any other perks such as free use of office car, quarters, health insurance, mobile Wi-Fi net, and other benefits?
If he is considered an employee drawing a salary, leaving other perks as mentioned above aside, he can be fixed as follows:
1. Basic pay at 40% of 40k
2. Dearness allowance at 35% of 40k (if fixed DA commensurate with basic pay and not linked to CPI or WPI as applicable for VDA)
3. City compensatory allowance at 10% of 40k
4. Entertainment allowance at 10% of 40k
5. Other allowances at 5% of 40k
Assumptions: Conveyance and quarters, health insurance, children's education - office account.
From India, Bangalore
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Please indicate the following:
1. Is it a partnership firm or a private limited company?
2. Is he an employee?
3. Does he possess any shares of your firm, and if yes, what type? Does he have a share in the firm's profits?
4. Is he entitled to any other perks such as free use of office car, quarters, health insurance, mobile Wi-Fi net, and other benefits?
If he is considered an employee drawing a salary, leaving other perks as mentioned above aside, he can be fixed as follows:
1. Basic pay at 40% of 40k
2. Dearness allowance at 35% of 40k (if fixed DA commensurate with basic pay and not linked to CPI or WPI as applicable for VDA)
3. City compensatory allowance at 10% of 40k
4. Entertainment allowance at 10% of 40k
5. Other allowances at 5% of 40k
Assumptions: Conveyance and quarters, health insurance, children's education - office account.
From India, Bangalore
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(Fact Check Failed/Partial)-The information provided is not entirely accurate. The payment of ESI and PF liabilities for a company director's remuneration is subject to specific rules based on the type of organization and the director's status. Consider consulting labor laws and company regulations for precise details.
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Dear Kumar,
Thank you for the response. Here is the answer to 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 possesses the shares of the company and the firm's profit.
4. No.
Thank you.
Regards,
Prakasam
From India, Chennai
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Thank you for the response. Here is the answer to 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 possesses the shares of the company and the firm's profit.
4. No.
Thank you.
Regards,
Prakasam
From India, Chennai
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(Fact Check Failed/Partial)-The user reply does not directly address whether ESI & PF liability on company director's remuneration should be paid yearly or at one time.
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PF & ESI.zip
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Exp.and esi pf mis format.xls
CiteHR.AI
(Fact Checked)-Your question is clear. Please specify if you are inquiring about the timing of ESI & PF liability payments for company directors' remuneration. (1 Acknowledge point)