How Can I Provide Proof of Income to Employees Paid on Professional Fees Without Salary Slips?

In the start-up where I am working, we have more than 100 employees who are on professional fees. Now they need salary slips, which I have informed that we cannot provide them. In that case, what are the other modes that I can use to give them that will show their monthly income received from the company.

Dear Kena, you have a hundred employees for whom you say that you cannot provide salary slips. Why? If they are employees, then the Shops and Establishment Act mandates the issuance of a salary slip per month. Why do you wish to go against this law?

Consultants or Employees?

Is your company using the services of employees as consultants? Are you paying a "professional fee" instead of a "salary"? Yes, this arrangement can work fine until it is noticed by the Enforcement Officer of EPFO or even by Labour authorities. If you wish to avoid legal wrangles in the future, then I strongly recommend following the law.

Thanks,
Dinesh Divekar

Hi,

We have hired employees on a professional fee basis and not on salaries. Hence, we need to issue payment vouchers. These individuals are consultants and are not employees with our company.

Issuing Form 16A as a TDS Certificate

Probably, you can issue Form 16A, which will serve as a TDS certificate. Form 16A will have details of the name and address of the deductor/deductee, PAN/TAN details, and challan details of TDS deposited. It also includes details of the income you have earned and the TDS deducted and deposited on such income.

Understanding Income from Consultancy

Income received from consultancy is termed as income from profits and gains of a business or profession. I am certain the company understands the difference between a consultant and an employee. I hope these consultants are bringing a unique set of skills that are not commonly available in your organization. Consulting is experience-oriented work and less about work orientation.

Considerations for Compliance

Please consider all aspects, including the number of employees and consultants, as at some stage, the Labour Office may have something to say.

On a monthly basis, you can circulate details of their fee that contain their PAN, bank information, standard fee, deductions, and actual fee. As the members above said, an inspector from EPFO and the Labour department may raise queries about their coverage; they are very much right. If the monthly fee exceeds the statutory limit (₹15,000 (Basic+DA) for PF, ₹21,000 (Gross) for ESI), you can have them fill out Form 11, stating that they were not a member in their previous employment. This will save you from the PF inspector to some extent.

Regards, Puran