We keep summer interns (2-6 months) who are pursuing their Masters and pay them a stipend of between Rs. 2-10K. Kindly suggest whether it is mandatory to deduct PF from the stipend. And if the PF is mandatory, is there any alternative way to keep interns and pay them without any statutory deductions.
Regards,
Rehan
From India, Indore
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Regards,
Rehan
From India, Indore
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Dear Rehan,
If you want to avoid any statutory obligations, you can consider offering him an internship with a proper internship agreement/contract that includes a renewal period. Mention his remuneration as service fees and do not process it through payroll. Instead, ask him to raise an invoice in his name every month, and the company can pay him by cheque as service fees. However, only TDS will be applicable. If the fees are nominal, he may be able to claim exemption from TDS deduction either fully or partially. It is advisable to seek advice on this matter from a tax consultant.
Please let me know if you need any further assistance or clarification.
Thank you.
From India, Mumbai
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208If you want to avoid any statutory obligations, you can consider offering him an internship with a proper internship agreement/contract that includes a renewal period. Mention his remuneration as service fees and do not process it through payroll. Instead, ask him to raise an invoice in his name every month, and the company can pay him by cheque as service fees. However, only TDS will be applicable. If the fees are nominal, he may be able to claim exemption from TDS deduction either fully or partially. It is advisable to seek advice on this matter from a tax consultant.
Please let me know if you need any further assistance or clarification.
Thank you.
From India, Mumbai
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Hello Rhan,
Yes, you have to deduct the PF amount from their basic salary or you can ask them for monthly bills and deduct TDS. I suggest deducting the PF amount to provide more benefits to employees.
Regards,
Ashish
From India, Pune
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Yes, you have to deduct the PF amount from their basic salary or you can ask them for monthly bills and deduct TDS. I suggest deducting the PF amount to provide more benefits to employees.
Regards,
Ashish
From India, Pune
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As per the court judgments, the stipend is not considered wages and hence is not covered by the EPF Act. The trainees recruited under a particular training scheme have no guarantee of employment after the completion of the training period. However, trainees who are to be absorbed onto the regular payroll after the training period are covered under the EPF Act.
Pon
From India, Lucknow
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Pon
From India, Lucknow
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As far as TDS is concerned, if the earnings are more than the threshold limit of IT, say 2 lakhs per annum, TDS will apply. However, students who are receiving stipends towards the cost of education are not subject to TDS.
Pon
From India, Lucknow
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Pon
From India, Lucknow
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Dear Mr. Rehan,
Hon. Mr. Pon has correctly replied. The stipend does not fall under the definition of salary, which is why TDS under salary will not be applicable. The meaning of stipend is 'VIDYAVETAN'. It is provided to the bonafide students of institutes or colleges that are registered or affiliated as per AICTE rules. This amount is usually paid as a "reimbursement of out-of-pocket expenses incurred by them while working on projects". The project work is part of their study and not a commercial activity. Hence, no PF or TDS deduction will be applicable.
I have seen many posts by Mr. Pon. High regards to him. Let us get his views.
Regards,
Ramakant
From India, Pune
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Hon. Mr. Pon has correctly replied. The stipend does not fall under the definition of salary, which is why TDS under salary will not be applicable. The meaning of stipend is 'VIDYAVETAN'. It is provided to the bonafide students of institutes or colleges that are registered or affiliated as per AICTE rules. This amount is usually paid as a "reimbursement of out-of-pocket expenses incurred by them while working on projects". The project work is part of their study and not a commercial activity. Hence, no PF or TDS deduction will be applicable.
I have seen many posts by Mr. Pon. High regards to him. Let us get his views.
Regards,
Ramakant
From India, Pune
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Dear ESI shall be applicable, as apprentices, in this particular case, are not under the Apprentice Act
From India
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From India
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Dear All, Yes I agree with Mr. PON. The Stipend is not the part of Salary/Wages under the definition of salary. regards N.s. Negi
From India, Mumbai
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From India, Mumbai
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Dear All Goodafternoon Give me vda letter of as per uttrakhand state. L.D.Patel P&HR-Head Vectus Industries Ltd.
From India, New Delhi
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From India, New Delhi
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Rules for Statutory Deductions Exemptions Perquisites-Pay roll.doc