Umakanthan53
Labour Law & Hr Consultant
+2 Others

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Dear Seniors,
Please help me out. I am aware that Employers Driver's Salary is exempted from Tax. But I want to know, whether Driver is eligible for PF/ ESIC, as currently we are paying his salary in cash and now we want to take in payroll.
Please suggest.
Meenakshi
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Dear Meenakshi,
I think the employer you mentioned may be a Managing Director or an Executive Director or a designated office similar to these. In that case what you are paying to him for his driver's salary is an allowance by virtue of holding such office and therefore exempt from tax. Even he might be paying actually more than this allowance and as such the Company is relieved of from additional expenses incurred towards employing a driver exclusively for this purpose. Therefore no employment relationship, whether direct or indirect, is created between the Company and the driver so employed by the individual at his own discretion. So, such a driver's employment becomes a personal service and not an industrial employment and as such exempt from the purview of any Labour Laws like EPF Act, ESI Act.
Meenakshi,
Mr. Umakanthan has already expressed nicely.
When you put driver of the Director on payroll. He will get benefits like any other employee, so he becomes eligible not only for PF/ESI but also for other benefits like Bonus and OT, similar to other employees. In many companies (particularly MNCs) drivers draw comparatively fat salaries due to Over time that they claim as the bosses working hours end only late evening and driver will be required till boss reaches home. Similarly you will have to make provision for their Gratuity.
Your company wants to put drivers on payroll which is a good development and may be the drivers family members will get a better lifestyle owing to better benefits being offered directly by company. The Company may be thinking of providing this as a part of good service offered by the individual but HR must know the cost involved besides salary being paid.
Thanks & regards
We provide drivers for General Managers and above in our Indian operations. All these drivers are on company rolls and are part of the company structure. All statutory compliances are done and they are provided with all benefits including PF, ESI, Gratuity and Superannuation. They are also entitled for all benefits as applicable to their grade. Their retirement age is as per company policy. Their working hours are governed by the local laws including spread over time. Those who work extra hours beyond the spread over time are also provided with over time.
Thank you very much for your respond, as rightly said by Mr.Umakanthan Sir, that driver mentioned by me is for MD & senior personnel. I also want to understand, if I take driver's on payroll, can we take the benefit of tax exemption. Is it possible ?
If I take them on payroll, whether their CTC can be considered as MD''s allowance.
No, Ms.Meenakshi, when such personal car drivers are taken into the rolls of the Company, they become the regular employees of the company and entitled to all the employment benefits. Therefore, their entire CTC would come under the head of salaries of employees of the Company in its P&L A/c. Consequent on this new measure, such of those top-brass for whose services these drivers are utilised would not be henceforth entitled to such allowance or any tax rebate in this regard.
Thank you, very much sir... to clear all my doubts. Meenakshi
Dear All

Since a workman engaged in regular Nature and wages for him is being paid such as allowance or reimbursed by company is key of association with each other however if he is performing his duty even 1% pertain to official purpose irrespective of his employment directly by company or by the director. remuneration of directors shall be subjected as per sec 197 of companies act. 2013 and the clause contain thereof in companies article (AOA) associan of article. Companies directors can draw the remuneration authorized by its article. No directoes can draw the unauthorized remuneration by way of car allowance or drivers allowance. As per income tax act. 1961 if car is owend by director the company can avail the deduction of fuel & maintenance of car and drivers salary actually incurred toward official purpose. In this scenario A workmen engaged in regular basic Never can be treated as directors perquisite if company is paying his salary as allowance or reimbursement by weather name called shall Not be deprived from statutory benefits like EPF, ESI, Bonus etc. Even if he is performing his 1% for official purpose.

Thanks & Regards

V SHAKYA

HR & Labour Law
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