Dinesh Divekar
Business Mentor, Consultant And Trainer
Bijay_majumdar
Freelancer In Hr &indirect Taxes For
+1 Other

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Dear Sir, I have received bill from my Security service provider.
He has charged me with Basic + DA= Gross + EPF (13%) + ESIC (4.75%)=Sub Total.
further he has charged management charges of 10% on Sub total amount.
i need guidance whether he has billed is correct?
i feel he should charge 10% service charge on Gross amount only he should not take PF and ESIC in calculations.
Pls reply ......
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Dear member,
When you hired the services of the security service provider, did you enter into a contract with him? If yes, then have the terms and conditions on the invoicing procedure been outlined? I recommend you to check the terms of the contract.
Thanks,
Dinesh Divekar
There is no law, guideline how a contractor will book the service charge. It depends on agreement between PE and the Contractor. It is not necessary to provide service charge by % basis. It may be fixed amount per employee per month etc.
Now, when a contractor takes care about monthly payment, compliance with PF, ESI etc. authority, he may claim service charge on the same activities.
To my opinion it is always better to have fix service charge and review the same at least in every 2 years considering inflation etc.
Thanks & Regds.,
S K Bandyopadhyay ( Howrah, WB)
+91 98310 81531
A clear contract agreement is required to be workked out between the principal employer and contractor before the comencement of contract.
The service charges applicable to the contractors involve not only the compliance aspect of the work but his involvement into management of operations as well. However the amount of service charges can be negotiated and arrived at a fixed %. As regards to compliance epf/esic /pt etc also involves some activities do be done by contractor and hence he is likely to charge the service charges in accordance.
Dear Friend,
There is nothing wrong in cahrging 10% service charge which is quite geniunine.
You are Just reimbursing the cost of wages[ Basic + DA= Gross + EPF (13%) + ESIC (4.75%)] are being paid to guards who are engaged in your establishment.
The agency who is supplying security guards is also doing business similiar to the clients with whom engaged but not charity.
The 10% charges you are paying out of which agency spends on Uniforms, ceremonial dress, Torches,baten,shoes, rain coat,sweter,jakets and stationary and the agency's establishment cost. The service cahrges are being decided at the begining of enagement of agency and it depends upon the supply.
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