Navigating Dual Company Salaries: How Can We Avoid Penalties and Ensure Compliance?

I'm working in a financial company, and we have a sub-branch in real estate. Both companies are separate Pvt. Ltd. firms with two different groups of employees. However, each group of employees receives their salary from their respective company. The first company (F.C.) pays its employees, and the second company (R.E.) pays its employees. Since both companies are partly and partially involved with each other, the salary amount given to employees should be distributed by both companies. This means each company should contribute 50% of the salary to the other; otherwise, both companies will incur a penalty.

Seeking Advice on Avoiding Penalties

Can anybody suggest how we can be penalty-free from this procedure? Also, what should we include in all employees' appointment letters? How should they be enrolled in both companies?

Waiting for the response!

Double employment is not allowed in India unless specifically mentioned by contracting parties, and that too in exceptional cases. In my opinion, putting your employees on two payrolls simultaneously is a very amateurish idea.

Regards,

Please keep employees on the payroll of one company contributing 50% of their salaries, and have the others on the payroll of another company. This way, employees will avoid double employment, and accounting for the purpose of TDS will be simplified. For further savings on TDS, you may consult an income tax expert.

Thanks,
V K Gupta

Well, in this case, the employees are employed by both companies. If you move them to be on the payroll of one company and off the payroll of the other, all the employees will be on the payroll of one company and off the payroll of the other. In this way, it will be easier to manage TDS and payroll. Additionally, by showing investment proof, you can make your TDS zero.

Regards,