Overtime Pay in Manufacturing: Do We Need to Deduct Professional Tax and PF?

I am Brinda, working in a manufacturing company in Ahmedabad. I would like to know whether we are required to deduct professional tax and PF on overtime.

Brinda

As far as the Professional Tax is concerned, your Account department must be in better condition because anything related to tax is the accounts outlook.

PF is not applicable on overtime.

Dear Brinda ji,

The Professional Tax is related to your "PROFESSION"; it's fixed as per salary or wage. Overtime is related to a part of your job. If it is more than 8 hours, it will attract overtime pay. The Provident Fund (PF) is not related to Professional Tax. Overtime is part of your wage, so it may attract it (Please refer to the relevant act).

Regards,
PBS KUMAR

Mr. Kumar,
Can you please clarify on the information that "if OT is more than 8 hrs it will attracts OT" , because as per the Act and my understanding, Pf is attarcted only on the following:
“basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) the cash value of any food concession;
(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;
Correct me, If I am wrong.

Thanks, Rajeevji,

As our accounts people were also confused, I asked here. But almost everybody is saying no. So, we will not deduct PF and PT.

Thanks,
Brinda

EPF need not be deducted for the OT paid. Since Profession Tax is a tax paid on the total amount of revenue received by an employee/professional/occupier, overtime wages shall also attract Profession Tax. However, since the relevant Act to assess profession tax is a State subject, the rules pertaining to the treatment of OT of a particular state may be different from another state. There may not be a specific provision to include OT in the total pay. But the enforcing authority can direct you to include the OT for getting the total income. I believe that gross salary as per the Income Tax Act includes overtime wages.

Regards, Madhu.T.K