I need your input regarding the calculation of construction cost versus wages (Gross Salary) cost percentage. This information is required for the PF audit.
The auditor has mentioned that out of the total Purchase Order (PO), gross wages/salary should be 25%.
Kindly advise.
From India , Mumbai
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The auditor has mentioned that out of the total Purchase Order (PO), gross wages/salary should be 25%.
Kindly advise.
From India , Mumbai
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Guideline from the Apex Court on Invoice Bifurcation
So far, I can remember there is one guideline from the Apex court that in the absence of bifurcation of the invoice, 25% of the total invoice should be considered as labor cost in the case of Civil Construction. Accordingly, PF & ESIC compliance has to be done.
The auditor is correct.
Importance of Invoice Bifurcation
It is always better for any cost if the invoice is bifurcated into material cost, labor cost, and supervisory cost (Profit) to avoid any complications.
Regards, S K Bandyopadhyay
From India, New Delhi
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367So far, I can remember there is one guideline from the Apex court that in the absence of bifurcation of the invoice, 25% of the total invoice should be considered as labor cost in the case of Civil Construction. Accordingly, PF & ESIC compliance has to be done.
The auditor is correct.
Importance of Invoice Bifurcation
It is always better for any cost if the invoice is bifurcated into material cost, labor cost, and supervisory cost (Profit) to avoid any complications.
Regards, S K Bandyopadhyay
From India, New Delhi
Acknowledge(0)Amend(0)
Scenario Analysis for PF Wages
What would be the scenario in the following cases?
Is 25% of Gross Salary considered as PF wages?
Gross Salary includes both daily wage workers and permanent employees. For permanent employees, the PF contribution is limited to the PF wage ceiling of Rs. 15,000, regardless of their higher basic salary. Apart from the PF members, there are also PF-exempt employees who are part of the project team, such as consultants.
Kindly suggest.
Regards,
Pradeep
From India , Mumbai
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What would be the scenario in the following cases?
Is 25% of Gross Salary considered as PF wages?
Gross Salary includes both daily wage workers and permanent employees. For permanent employees, the PF contribution is limited to the PF wage ceiling of Rs. 15,000, regardless of their higher basic salary. Apart from the PF members, there are also PF-exempt employees who are part of the project team, such as consultants.
Kindly suggest.
Regards,
Pradeep
From India , Mumbai
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PF Gross Wages Consideration
25% is the consolidated amount and should be considered as PF gross wages. The restriction on PF contribution may be up to 15k per month. There may also be excluded employees.
Regards, S K Bandyopadhyay
USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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25% is the consolidated amount and should be considered as PF gross wages. The restriction on PF contribution may be up to 15k per month. There may also be excluded employees.
Regards, S K Bandyopadhyay
USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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.
Coverage of construction & contact workers under PF 22.1.2015.pdf
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