Hi,
Pooja,
Hope you are doing well. I am surprised to see your post, there are a few reason. I am saying this because I have a small firm, beside worked with MNC's. Although I have completed MBA with HR & Finance, these days I spent maximum time in Balance sheets & all as compared to HR. As said by Saswata Banarjee , CTC is an internal subject (as said) but one have to follow legal structure associated with it & any corporate/firm is bound to follow INDIAN GAAP, else if someone challenge legally challenged then Corporate/Firm cant defend in court of law.
Now in case, your company is not registered under PF/ESIC, but still you are deducting PF/ESIC from salary( at least showing the same as per CTC break down), this is 1st offence- Forgery with PF/ESIC Dept & employee. Legally you can show the same only if you are registered, and its a mandate for corporate deducting PF/ESIC to have a ledger for the same if registered, reason being if such corporate is challenged under law then verification/ investigation can be made by concern department or law enforcement machinery.
If you are not maintaining the ledger, and deducting PF/ESIC (showing in CTC slab/payslip), then you cant defend yourself if questions are raised with regards to financial status of your corporate /firm. Eg: No ledger, so cant show the a/c details in Balance Sheet, however deduction is made. Where this amount is going? To whom?. Now if you claim you are paying the money to employees( means showing deduction in CTC slab/pay slip, but not deducting actually). It is equivalent to showing debit in statement / employees salary a/c or Journal, but not debiting. So from some hypothetical a/c this money must come (Credit) to pay the amount deducted, which a/c? How you are showing this in Balance sheets?
If you maintain a ledger, and if investigation happen due to any reason, then the above question's will be there, with no answer to defend & at the same time, it will be validated that you are associated with some kind of forgery or malpractice .
So, if any employee suit your firm & say you have deducted money for PF/ESIC and but not paid the same (although you paid), how you are going to defend? In CTC breakup , you have shown a deduction, so same will be there in pay slip. If you are paying the same amount to employees that you have deducted for PF/ESIC, then officially this amount should come from an a/c( not equal PF/ESIC a/c ),in simple words you have to show on payslip why that amount is paid, you cant show PF/ESIC(reason being if you show PF/ESIC is reimbursed, then what is the use of deducting money for PF/ESIC on 1st hand on pay slip& why it is shown in CTC?), you can show as 'Special Allowance'/HRA etc. Now, question is legally there is a debit statement for PF/ESIC , so you are legally deducting money for PF/ESIC and are not able to show legally that you are actually paying this money to employee, so if employee charge against you, that you have not provided him PF/ESIC no, deducted money for PF/ESIC & have not paid the same how you are going to defend yourself?
Say , your competitor went to IT dept/ Corporate affairs dept and complained against you that you are not following corporate rules & regulation along with labor laws, how you will defend? You mixed a/c details will first go against you, hardly matters the efficiency of your CA-who manage your a/c & your corporate HR's. If during investigation, they found that in your CTC there is a PF/ESIP matrix while you are not registered to PF/ESIC, will they spare you? Will PF/ESIC department remain quiet! ESIC provide emergency medical facilities to employees during needs, so if any accident occur with any of your employees, & they cant avail ESIC facility, although they have evidence that in their CTC there is a deduction for ESIC, will common people spare you or the family members or Law enforcement agencies?
No, one will believe that although there is a debit for PF/ESIC in payslip/CTC/Legal instruments, but you have not made a debit, if you cant show officially that you have reimburse same amount from PF/ESIC a/c. If you can show it officially, then question will be what was your intension to show PF/ESIC in CTC on 1st hand & 2nd making deduction for the same in payslip, then reimbursing it?
Regards
Sovik B
Managing Director
S.S ENTERPRISE
ph:08130901897.