Is PF Deduction Needed for Annual GST Accounting Charges and TDS Implications?

An accountant (not a Chartered Accountant) is paid a GST accounting charge of say Rs 30,000 or Rs 50,000 annually for the financial year in March. Will there be any liability to deduct PF? If not, do we still need to report it in the monthly PF return for March as a non-deduction employee after allotting a PF account number?

Further, will such payment attract TDS under the Income Tax Act?

Please answer. Thanks.

If you have hired an accountant on a retainership basis, you need not pay PF in respect of this person. This is because he is not an employee of your organization but there exists only a contract for service, which is outside the purview of ESI and PF. For the service that he renders, he will be issuing an invoice in favor of the company, and the company is meeting that invoice by paying the amount. In this case, there is no element of a master-servant relationship.

PF Liability for Accountant Fees

Many thanks, Madhuji. In another case, there were monthly invoices received from an accountant for accounting charges of Rs 2500 per month. However, the Enforcement Officer treated it as being liable to PF. He took the view that an accountant is not a professional like a lawyer or CA, and so his fee is not a professional fee but only a salary for his services. Consequently, he created demands for many previous years on this premise, treating the accountant as an employee. I do not know if he was right or wrong in that case.

If there is no monthly payout, just an annual invoice in March, of an amount more than the threshold of PF, then it should certainly be out of PF. Please enlighten.

Regards.

Independent Contractor Status

Please explain to the enforcement officer that he is an independent contractor and is not governed by the code of conduct and other HR policies of the company. Instead, he works according to his convenience using his own resources and infrastructure. There exists only a contract for service and not a contract of service. For the services he provides, he raises an invoice, and such an invoice is subject to GST at the prescribed rate, subject to conditions attached to turnover, etc.

Billing Recommendations

If you want to avoid such hassles, you can also ask the accountant to raise an annual bill. However, I would not recommend this action because an accountant working independently, who takes on the work of other companies along with yours, is not an employee.