Hi All,
Would need your help in clarifying a small doubt here.
We are in the process of incoporating Vehicle Mantainence Allowance to some of our sr.employees as part of their CTC. Under this allowance, payments can be made under following categories:
1. Petrol
2. Car Mantainence
3. Driver's salary upto Rs.6000 per month
Now, I would like to know that is it mandatory for us an organization to deduct PF & ESI from Driver's Salary amt to be paid to employee particularly when the driver is not hired by organization but by employee himself.
Would really appreciate if you can help me sort this and with reference to certain PF acts which require or do not require us to deduct PF & ESI in this scenario.
thanks
Amit
From India, Delhi
2Would need your help in clarifying a small doubt here.
We are in the process of incoporating Vehicle Mantainence Allowance to some of our sr.employees as part of their CTC. Under this allowance, payments can be made under following categories:
1. Petrol
2. Car Mantainence
3. Driver's salary upto Rs.6000 per month
Now, I would like to know that is it mandatory for us an organization to deduct PF & ESI from Driver's Salary amt to be paid to employee particularly when the driver is not hired by organization but by employee himself.
Would really appreciate if you can help me sort this and with reference to certain PF acts which require or do not require us to deduct PF & ESI in this scenario.
thanks
Amit
From India, Delhi
Hi Amit
In my opinion,you need not deduct PF or ESI from the amount you are paying to your employee since its the employee who is engaging the driver in his personal capacity but not the company.But you can advice your employee to insure the driver for a decent amount under personal accident policy apart from the comprehensive vehicle coverage.
Sincerely
Pip
From India, Hyderabad
In my opinion,you need not deduct PF or ESI from the amount you are paying to your employee since its the employee who is engaging the driver in his personal capacity but not the company.But you can advice your employee to insure the driver for a decent amount under personal accident policy apart from the comprehensive vehicle coverage.
Sincerely
Pip
From India, Hyderabad
Dear Amit
In some of the factories/establishments the officers employed as employees are being paid drivers’ allowance per month. This allowance is being paid to enable the officers to appoint a driver at their own level and such drivers employed are not being paid salary directly by the factories/establishments. Where such allowance is being paid to the employees and the drivers are not engaged by the employees, in such event the allowance paid as such will be considered as wage under Section 2(22) of the ESI Act and contribution will be chargeable provided the employee is coverable under the Scheme..
However, where the services of the drivers are being utilised, in such event the drivers so engaged will be covered as employee and contribution will be payable on the amount paid to the drivers as salary and booked in the ledgers of the employer under the heading ‘Drivers’ Allowance’.
For any quary regarding ESIC Please use link: http://esic.nic.in <link updated to site home>
Vikas
From India
In some of the factories/establishments the officers employed as employees are being paid drivers’ allowance per month. This allowance is being paid to enable the officers to appoint a driver at their own level and such drivers employed are not being paid salary directly by the factories/establishments. Where such allowance is being paid to the employees and the drivers are not engaged by the employees, in such event the allowance paid as such will be considered as wage under Section 2(22) of the ESI Act and contribution will be chargeable provided the employee is coverable under the Scheme..
However, where the services of the drivers are being utilised, in such event the drivers so engaged will be covered as employee and contribution will be payable on the amount paid to the drivers as salary and booked in the ledgers of the employer under the heading ‘Drivers’ Allowance’.
For any quary regarding ESIC Please use link: http://esic.nic.in <link updated to site home>
Vikas
From India
Dear Amit,
Driver Allowance is itself taxable at the hands of the employee.
Driver appointed by a senior employee of the Company as per the break up of his CTC and claimed as a reimbursement does not attract ESI or PF as per the coverage definitiion of these two enactments.
However, the senior employee has to furnish proof to HR/Accounts of his having paid the driver for the 'driving' services rendered vide a cash/cheque receipt.
Perk values are these days taxable as FBT and payable by the Company if provided by the Company @ 6%.
Regards,
Rahul Kumar
From India, New Delhi
Driver Allowance is itself taxable at the hands of the employee.
Driver appointed by a senior employee of the Company as per the break up of his CTC and claimed as a reimbursement does not attract ESI or PF as per the coverage definitiion of these two enactments.
However, the senior employee has to furnish proof to HR/Accounts of his having paid the driver for the 'driving' services rendered vide a cash/cheque receipt.
Perk values are these days taxable as FBT and payable by the Company if provided by the Company @ 6%.
Regards,
Rahul Kumar
From India, New Delhi
Dear Amit,
In case of BASF India Ltd V/s M. Gurusamy, RPFC (2004 I CLR 995 BOM-DB), it has been held that drivers in service of Managers are in fact employees of the Company.
I do not have the entire citation of case but you can find it from your Legal Practitioners.
Trust this helps you to take appropriate decision.
Regards,
HNP
Hi All,
Would need your help in clarifying a small doubt here.
We are in the process of incoporating Vehicle Mantainence Allowance to some of our sr.employees as part of their CTC. Under this allowance, payments can be made under following categories:
1. Petrol
2. Car Mantainence
3. Driver's salary upto Rs.6000 per month
Now, I would like to know that is it mandatory for us an organization to deduct PF & ESI from Driver's Salary amt to be paid to employee particularly when the driver is not hired by organization but by employee himself.
Would really appreciate if you can help me sort this and with reference to certain PF acts which require or do not require us to deduct PF & ESI in this scenario.
thanks
Amit[/quote]
From India, Mumbai
In case of BASF India Ltd V/s M. Gurusamy, RPFC (2004 I CLR 995 BOM-DB), it has been held that drivers in service of Managers are in fact employees of the Company.
I do not have the entire citation of case but you can find it from your Legal Practitioners.
Trust this helps you to take appropriate decision.
Regards,
HNP
Hi All,
Would need your help in clarifying a small doubt here.
We are in the process of incoporating Vehicle Mantainence Allowance to some of our sr.employees as part of their CTC. Under this allowance, payments can be made under following categories:
1. Petrol
2. Car Mantainence
3. Driver's salary upto Rs.6000 per month
Now, I would like to know that is it mandatory for us an organization to deduct PF & ESI from Driver's Salary amt to be paid to employee particularly when the driver is not hired by organization but by employee himself.
Would really appreciate if you can help me sort this and with reference to certain PF acts which require or do not require us to deduct PF & ESI in this scenario.
thanks
Amit[/quote]
From India, Mumbai
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PF query.doc
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