Understanding PF Deductions: What Are the Specific Components Involved?

I want to know on what heads PF is being deducted.

Regards,
Smita.

I need to know what the eligibility criteria are for:

1. PF
2. ESI
3. Bonus

If anyone knows this, please help me.

Regards,
Smita.

Eligibility Criteria for PF and ESI Deductions

1. For employees with a Basic CTC of up to Rs. 6500/-, you can deduct the PF. However, for amounts above that, you need a declaration from employees indicating whether they want PF deduction or not.

2. For employees/workers receiving Rs. 90/- per day as daily wages, up to a monthly salary of Rs. 15000/-, you can deduct ESI.

Thanks & Regards,
Ashit Prusty
Manager HR & Operation | HSPL
Cell: [Phone Number Removed For Privacy Reasons].

PF Deduction Heads

Following are the categories under which PF is deducted from both the employee and the employer. Deductions for PF are mainly in five heads:

- **Account 1:** PF (12% - Employee + 3.67% Employer)
- **Account 10:** Pension (8.33%)
- **Account 2:** Admin charges towards A/c 1 and A/c 10 (1.10% of Basic - paid by employer)
- **Account 21:** EDLI (0.50% - Employer)
- **Account 22:** Admin charges for A/c 21 (0.01%)

Total Contribution

- **Employee:** 12%
- **Employer:** 13.61%

Regards,
Jacky Christian.

Please refer to the Bare Act on the subject, which will help you and prove to be handy. These are fundamental issues. Please develop the habit of referring to such acts to enrich your knowledge. However, the attachment is a collection from a few sources that will be handy.

Regards,
Kumar S. BG

Understanding the Contract Act and Deductions

Can somebody tell me about the Contract Act? We have four contractors, and all contractors have no workmen; they are working on our premises according to the piece-rate system. All four contractors submit a monthly bill, each consisting of a monetary value of approximately ₹25,000 per bill. Except for these four contractors, none have any PF and ESI numbers. How can we deduct the ESI and PF amounts from the payment of the bill? Please help me out. You can provide information via my email [Email Removed For Privacy Reasons].

Please buy a copy of the Bare Act of the Contract Labour (Abolition and Regulation) Act. For quick reference, please see the attachment.

It is your duty to ensure compliance with PF and ESI before processing their bills as a Principal Employer. Also, refer to the PF and ESI Acts for guidance.

Regards,
Kumar S.
BG.

As per the PF Act,

Employee Definition:

"Employee" as defined in Section 2(f) of the Act means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who receives wages directly or indirectly from the employer. This definition also includes any person employed by or through a contractor in or in connection with the work of the establishment.

Membership:

All the employees (including casual, part-time, daily wage, contract, etc.) other than an excluded employee are required to be enrolled as members of the fund on the day the Act comes into force in such an establishment.

Even though employees working on a piece-rate basis, their PF deduction is still mandatory. If their PF is not deducted, it constitutes a statutory violation by the principal employer.

Therefore, it is advisable to deduct the PF and ESI amount from their monthly bill and deposit it under your company's PF and ESI code. Alternatively, you can have a new PF and ESI code solely for subcontractors and deposit their amount under that code (preferred).

If you require more information, please feel free to discuss.

Regards,
Ratikanta Rath

Your query is not clear. Could you elaborate on it? What type of job was awarded to them? I understand from your query that they are working with you as consultants or retainers. If they are long-term retainers, your company has to cover them with PF. What is the strength of your organization?