Navigating PF & ESIC Exemptions: How to Structure Salaries and Choose Tax-Saving Allowances in a BPO?

Hi all,

It's Samir again. Now, I am facing a different problem, and I have a doubt. I need your help to solve it.

1. In order to get exemption from PF & ESIC, do we have to put basic & DA above 7500, or should the whole monthly salary, including allowances, be more than 7500?

2. Can anybody suggest good allowances that we can offer in our BPO that:
a. Do not invite fringe benefit tax to the company, and
b. Are tax-savers for employees?

I have already included some such as HRA, Medical, Conv...

Thanks.

Hi Samir,
Hi All,
Its Samir again, Now I am facing different problem actually I have doubt,
And I need your help to solve,
1. In order to get expemtion from PF & ESIC ,
do we have to put basic &DA above 7500.
OR
the whole monthly salary ie with allowances should be more than 7500.
If your monthly payroll exceeds Rs 7500/- ESIC wouldn't be applicable.
You cannot get an exemption on PF which is a statutory requirement.
2. and can any body suggest good allowances which we can give in which (ours is a BPO)
a. It does not invite fringe benefit tax to the company &
b. And tax saver for employee's too.
few of it I have kept like ( HRA, Medical, Conv..) .
Suggest – please read the topic FBT implications on salary components under Compensation & Benefits..
Have a great day..
Cheers,
Rajat

I heard that PF is not obligatory for employees having a salary more than Rs. 6500/-. Let me know the actual thing on this.

Hi Samir,

Up to Rs. 7,500 (Gross salary), ESI should be paid. In the case of PF, 6500 is the limit, i.e., as per the act, the employer can limit his contribution at 6500 (Basic + DA).

Shanmugam

Hi,

A company is not liable to register with the PF if it has fewer than 20 employees withdrawing more than Rs. 6500/-

Regards,
Soumya Shankar

29th May 2006

Dear Friend,

Regarding the Provident Fund: The employment strength of 20 or more is at the management's discretion to cover or not. However, most big industries/establishments may voluntarily approach the P.F. authorities to cover their organization. This will also attract the IT saving. The ceiling limit of P.F. is Rs. 6500/- on Basic + D.A.

Regarding the Employees State Insurance: The coverage will depend on the location of the ESI dispensary and local office. The ceiling limit of ESI is Rs. 7500/- on the total gross salary.

Regards,
PBS KUMAR