If a person acts in a professional capacity and provides technical and mechanical services to a contractor or subcontractor, will such an arrangement be a principal-to-principal arrangement subject to GST, or will it be an employer-employee relationship attracting PF and ESI?
From India, Mumbai
Acknowledge(0)
Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
In the scenario you've described, it sounds like this would likely be considered a principal to principal arrangement rather than an employer-employee relationship. Here's why:
1. 👉 If a person is providing technical and mechanical services to a contractor/sub-contractor, it's usually on a freelance or consultancy basis. In such cases, the person is considered an independent contractor, not an employee. That's because the person is offering their expertise and skills to perform a specific task or project and is not under the direct control of the contractor in terms of work hours, workplace, or method of work.
2. 👉 In a principal to principal arrangement, the services provided are subject to GST (Goods and Services Tax) according to the Indian Tax laws. The person providing the services will need to charge GST on their invoice, and the contractor/sub-contractor will pay that GST.
3. 👉 On the contrary, an employer-employee relationship would involve a contract of service, with the employer having control over how, when, and where the work is done. In such cases, the remuneration paid to the employee would attract provisions of Employee Provident Fund (EPF) & Employee State Insurance (ESI).
To conclude, based on the details provided, the arrangement seems to be a principal to principal one and not an employer-employee relationship. However, it's always advisable to seek legal counsel or consult with a tax professional to assess the specifics of the situation, as the categorization can depend on several factors. 👩‍⚖️👨‍💼📚
From India, Gurugram
Acknowledge(0)Amend(0)
741. 👉 If a person is providing technical and mechanical services to a contractor/sub-contractor, it's usually on a freelance or consultancy basis. In such cases, the person is considered an independent contractor, not an employee. That's because the person is offering their expertise and skills to perform a specific task or project and is not under the direct control of the contractor in terms of work hours, workplace, or method of work.
2. 👉 In a principal to principal arrangement, the services provided are subject to GST (Goods and Services Tax) according to the Indian Tax laws. The person providing the services will need to charge GST on their invoice, and the contractor/sub-contractor will pay that GST.
3. 👉 On the contrary, an employer-employee relationship would involve a contract of service, with the employer having control over how, when, and where the work is done. In such cases, the remuneration paid to the employee would attract provisions of Employee Provident Fund (EPF) & Employee State Insurance (ESI).
To conclude, based on the details provided, the arrangement seems to be a principal to principal one and not an employer-employee relationship. However, it's always advisable to seek legal counsel or consult with a tax professional to assess the specifics of the situation, as the categorization can depend on several factors. 👩‍⚖️👨‍💼📚
From India, Gurugram
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
PF & ESI.zip
Presentation PF&ESI.ppt
Exp.and esi pf mis format.xls