I am working with a Manufacturing Company, which is a partnership firm. Recently, a new partner has joined, and we are now paying him a salary. Previously, we did not provide any salary to the other partner. I have a query: Can we deduct the PF share from the new partner's salary?
Thank you.
From India, Shimla
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11Thank you.
From India, Shimla
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If you are paying him as salary then sure you should deduct PF share of both EE & ER in respective share
From India, Bangalore
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From India, Bangalore
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PF can be deduct from employee’s salary. Partner is employer, then how can we do so? How any person can be employee and employer at same point of time? Plz correct me i am wrong.
From India, Ahmadabad
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From India, Ahmadabad
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Salary to Partners and PF Deductions
Under the Accounts and Income Tax Act, salary to partners is considered a part of profit. At best, it's regarded as drawings in anticipation of profits and merely a measure of how much profit will go to each partner. Therefore, I don't think you need to deduct PF on a partner's salary. It doesn't seem to match the definition of an employee under the PF Act.
From India, Mumbai
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Under the Accounts and Income Tax Act, salary to partners is considered a part of profit. At best, it's regarded as drawings in anticipation of profits and merely a measure of how much profit will go to each partner. Therefore, I don't think you need to deduct PF on a partner's salary. It doesn't seem to match the definition of an employee under the PF Act.
From India, Mumbai
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Partner's Salary and PF Deduction
A partner is not considered an employee; therefore, their salary is taxable under "Income from Business/Profession." Even under the PF Act, a partner of a firm is both an employer and an employee, so there is no need to deduct PF from the partner's salary.
However, the same person can be considered both an employer and an employee in the context of PF. For example, a manager or salaried director will be treated as an employer, and at the same time, PF can be deducted from their salary as they are employees.
From India, Calcutta
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A partner is not considered an employee; therefore, their salary is taxable under "Income from Business/Profession." Even under the PF Act, a partner of a firm is both an employer and an employee, so there is no need to deduct PF from the partner's salary.
However, the same person can be considered both an employer and an employee in the context of PF. For example, a manager or salaried director will be treated as an employer, and at the same time, PF can be deducted from their salary as they are employees.
From India, Calcutta
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Partners vs. Employees: Understanding EPF & MP Act Coverage
A partner of the firm cannot be construed as an employee. However, the partners of an establishment receiving salaries will not be included as employees for coverage under the EPF & MP Act.
Case Law References
- Prakash D. Shah & Others v. Union of India, 2003 (Bombay HC)
- Om Roller Flour Mills v. Union of India, 2002 (Calcutta HC)
From India, Mumbai
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A partner of the firm cannot be construed as an employee. However, the partners of an establishment receiving salaries will not be included as employees for coverage under the EPF & MP Act.
Case Law References
- Prakash D. Shah & Others v. Union of India, 2003 (Bombay HC)
- Om Roller Flour Mills v. Union of India, 2002 (Calcutta HC)
From India, Mumbai
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