Hiring Equipment: Should We Deduct PF/ESI from a JCB Rental Bill?

Dear All members,

Greetings of the day! I want to bring a situation to the forefront of the Forum, which is as follows: I am hiring a JCB Machine for some days in a month for one of my sites on a rental basis. A bill was raised by the JCB Provider company. Now, my question to all forum members is:

1. Should I deduct some amount from the bill in lieu of statutory provisions, i.e., PF/ESI, even though the bill was raised for rental only?

2. Is there any responsibility of my company as a principal employer to pay PF/ESI for that particular period?

Kindly share your views.

Thanks and Regards,
Rajesh

Hi,

Yes, it is your company's responsibility to deduct mandatory contributions towards compliance. PF would not be required to be deducted as this is a repair and maintenance work for a short time, and payment is to be made based on the raised bill of the vendor. However, ESI needs to be covered as any accident or injury may require medical attention.

It is between you and the service provider's agreement as to who will bear the cost. Anyone can do that, but as part of compliance, your company would be held responsible.

Thank you, Harpreet, for your valuable input. It may be possible that the vendor is deducting the ESIC contribution of the driver. In this case, ESIC deduction is not needed, but we need to check with the principal employer.

In another scenario, if the vendor is not deducting the ESIC contribution, then we must deduct the contribution from the vendor's bill and deposit it to ESIC.