Statutory payments

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Prithwiraj Hait (Querist)
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13 June 2010 What should be the rate of ESI deduction from contractor's payment if material component is not segregated from labour (service is rendered in client's premises)?
In general rate of ESI deduction is 6.5% but on what ratio should it be apportioned?

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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13 June 2010 You have to estimate the labour value. Say 60% / 40% or 1/3 or 1/2 depending on the industry and practiability and on that amount you have to deduct 6.5% totally from the contractor.

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Prithwiraj Hait

Prithwiraj Hait (Querist)
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13 June 2010 Yes sir.They are estimating labour and material on 60:40 ratio as most of the contracts were labour intensive.
But we found a bill where it was clearly mentioned "labour only" in this case can they apply 60:40 ratio and then deduct ESI @6.5% on labour component. I mean were they correct in doing so??
I think they should have deducted ESI on the entire Bill amount.

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