Are Statutory Deductions Like PF, ESI, and PT Required on Employee Compensation?

Statutory Deductions on Employee Compensation

Are statutory deductions like PF, ESI, and PT applicable if compensation is paid to the employees?

Thanks,
Rajesh N

If by compensation payable you mean retrenchment compensation, then ESI or EPF need not be deducted since it is not earned by the employee by working in the company. At the same time, since it is an income in the hands of the employee, profession tax, which is paid on the income and not on the 'salary' of the employee, should be deducted from the amount of retrenchment compensation.

Regards,
Madhu.T.K