Query Regarding Salary Payment and Tax Deductions
We are running a business trading in electrical goods, specifically an Electrical Shop. We are registered under the Punjab VAT Act 2005 and maintain our books in a computerized format, which are audited by a Chartered Accountant. We also prepare our Balance Sheet and file our Income Tax Returns.
Currently, only two employees are working with us, and we pay them a salary of Rs. 15,000 to 16,000 per month in cash. We have not obtained any PF or ESI registration.
Can we pay a salary by check amounting to Rs. 26,000 per month without deducting TDS, etc., as calculated under Basic + DA + HRA + Conveyance Allowance + Medical Allowance, etc.?
Email: [Email Removed For Privacy Reasons]
From India, Chennai
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We are running a business trading in electrical goods, specifically an Electrical Shop. We are registered under the Punjab VAT Act 2005 and maintain our books in a computerized format, which are audited by a Chartered Accountant. We also prepare our Balance Sheet and file our Income Tax Returns.
Currently, only two employees are working with us, and we pay them a salary of Rs. 15,000 to 16,000 per month in cash. We have not obtained any PF or ESI registration.
Can we pay a salary by check amounting to Rs. 26,000 per month without deducting TDS, etc., as calculated under Basic + DA + HRA + Conveyance Allowance + Medical Allowance, etc.?
Email: [Email Removed For Privacy Reasons]
From India, Chennai
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The breakup of salary as per [Basic + DA + HRA + Conveyance Allowance + Medical Allowance, etc.] is always a welcome feature. However, you have to suggest to your management to enroll for PF & ESI. The advantages here are that in case of any accidents during the course of work, ESI provides necessary support like medicine & leave benefits. Monthly ESI benefits can be obtained for an employee's self and their family.
Regarding PF, it is paid on Basic + DA, except for the workers drawing minimum wages where it will be 100%. In the case of a higher salary given to an employee, Basic + DA can be restricted to Rs. 6500/- or less, whichever is applicable. In this scenario, a maximum amount of Rs. 6500 x 12 = Rs. 780/- pm will be deducted from the employee, and an equal amount of contribution from the management.
Thanks
From India, Bangalore
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202Regarding PF, it is paid on Basic + DA, except for the workers drawing minimum wages where it will be 100%. In the case of a higher salary given to an employee, Basic + DA can be restricted to Rs. 6500/- or less, whichever is applicable. In this scenario, a maximum amount of Rs. 6500 x 12 = Rs. 780/- pm will be deducted from the employee, and an equal amount of contribution from the management.
Thanks
From India, Bangalore
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Salary Breakup with ESI.xls
Salary & Compensation Guidelines.zip