Labour Welfare Fund (LWF) / Professional Tax (PT) Applicability

I wanted to know if a company implements a project in various states and hence has employed/deployed employees in different states. However, the payroll is centrally processed at its headquarters in Mumbai. Will LWF / PT of all the states in which it operates apply, or only for Maharashtra for all the employees? What if the company doesn't have an office to operate in all states?

Welfare fund can be centralized in case you do not have an office in the places where your employees are working. However, profession tax cannot be paid at Corporation/Municipality/Gram Panchayat where your HO is situated. In the latter case, the amount should be paid to the respective office of the local administration where the employees are engaged because Profession tax is a state subject and a revenue of the state.

If you have an office in another state, the said office should be registered under the Shops and Commercial Establishments Act of that state. By doing so, automatically, the employees employed in that office will become subjected to the welfare fund applicable to the employees of shops and commercial establishments of that state. In case you do not have an office, the question of registration does not arise, and therefore, there is no need for payment of the welfare fund at the place of working.

Madhu.T.K

Hi,

Your company must apply for and remit MLWF and PT state-wise only, even if you do not have an office in all states.

Regards, Triptika +91-9967630445

On incentives: Professional Tax is applicable if it is paid once a year. Is there any notification regarding it?

Profession tax is levied on the income of individuals, and it does not mean that it is payable on the "salaries" alone. It is payable by a professional practicing medicine, law, etc., who do not receive any salary. Therefore, PT is to be computed on the gross income received by an individual, whether by means of salary or not. As such, you have to include bonus, incentive, or other allowances paid to him during the period. Most of the states make it payable in half a year. Then the half-year period during which the payment of yearly incentive or bonus falls should also include the same as income received by the respective employee.

Regards,
Madhu.T.K