Dear All,
My question is related to the attraction of ESI and PF on the jobwork with material done by a contractor inside the factory. For the contractor which supply manpower It is very much clear that he has to comply with the ESI and PF liability on the total wages paid by him, but suppose a Contractor has done some job work which includes the material also, inside the factory premises, say for 4 / 5 days and then the bill has been raised by him.
Now what will be the ESI & PF liability on the total bill, as per some understanding with the ESI & PF people we have been assuming that of the total bill involves 75% being the Material Cost and the rest 25% being the Labour Cost, so we have been depositing the ESI and PF on the 25% of the total bill amount under the particular contractor’s name.
My questions about the same is that :
Ø On what basis it is assumed that Labour component is 25% and we have to pay ESI & PF on that.
Ø Is there any ruling to support this type of contribution of ESI & PF.