Is PF Deduction Needed for a Driver Hired Through a Vehicle Owner? Let's Discuss!

Query on PF Deduction for Hired LMV Driver

We wanted to know whether the hired LMV driver, arranged by the vehicle owner, shall be applicable for the deduction of PF or not. Should we ensure his deduction or not? We have hired one light vehicle from a private party on a monthly basis for 12 hours daily engagement for our day-to-day employee transport activities. We have issued a work order to him for 6 months with the terms that he will arrange the driver, handle his payment, and maintain the vehicle.

Thank you.

Sir, he is a private party who purchased a new vehicle for personal use, and we needed a vehicle for our use. We hired it by giving a 6-month work order on a monthly payment basis. Since the party has only one employee, he will not be covered under the Contract Labour Act. In this case, if we hire for just a 1-month purpose, should we, as the principal employer, deduct his PF or not?

Thank you,
Suraj Kumar Biswal

From the ESI point of view: An inspector may review the TA/DA expenses and question the payment of ESI on such expenses, raising a demand for the same.

Contractual Services

When entering into long-term contracts, please ensure that the employees on the contractor's payroll are paid by the contractor, and ESI/PF are duly deducted/contributed and deposited by them. It is preferable to have a copy of the wages payment for record-keeping.

In the Disclosed Circumstances

It appears that PF/ESIC is not applicable to the contractor. For safety reasons, you must do the following:

- Take a declaration from the contractor regarding the applicability of PF/ESIC.
- Have an undertaking of liabilities in case of an accident at work or on duty.
- Insist that the contractor purchase an accidental policy with a sufficient sum assured for the driver.
- Submit a copy of the policy to your office.

Income Tax

Please ensure that TDS has been deducted under section 194 C at the applicable rate when the overall payment is expected to exceed Rs 20,000.00 in a financial year.

Financial Audits

You must obtain proper invoices from the taxi operator in the correct format. Simply mentioning the charges on the letterhead is not sufficient and may lead to objections from auditors.

Thank you.