Statutory recoveries from employee's

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 November 2011 Hi All,

Ours is a pvt ltd company and employees were given P.F coverage from May 2011 onwards with restrospective effect from January 2011 as the head count crossed 20 from February 2011.

But the enforcement office adviced us to provide coverage from January becuase we had 2security and 1 housekeeping person and 17 employees thus making the head count 20 for pf coverage, although their agencies provided them with P.F.

Till May 2011 we paid salaries to employee's and later recovered the P.F employer and employee coverage from Jan.

Is it wrong or against the law to recover any statutory levies (PF,PT,ESIC,TDS) that were not deducted on time but deducted subsequently.

Can someone please answer this query at the earliest.

Thanks in advance.

Regards.

VIJENDRA DARGAR

VIJENDRA DARGAR (Expert)
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04 November 2011 PROVIDENT FUND

AS PER PF ACT 1956 (SECTION 12)

No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme reduce whether directly or indirectly the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension gratuity provident fund or life insurance to which the employee is entitled under the terms of his employment express or implied.

ACCORDINGLY, the PF liability is yours you will have to deposit employer's as well as employees contribution. But you can't recover employer's contribution form employees.

NOW

As far as contractual employee is concerned

AS PER SECTION 8A

(1) The amount of contribution (that is to say the employer's contribution as well as the employees' contribution in pursuance of any Scheme and the employer's contribution in pursuance of the Insurance Scheme); and any charges for meeting the cost of administering the Fund paid or payable by an employer in respect of an employee employed by or through a contractor may be recovered by such employer from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

(2) A contractor from whom the amounts mentioned in sub-section (1) may be recovered in respect of any employee employed by or through him may recover from such employee the employee's contribution under any Schedule by deduction from the basic wages dearness allowance and retaining allowance (if any) payable to such employee.

(3) Notwithstanding any contract to the contrary no contractor shall be entitled to deduct the employer's contribution of the charges referred to in sub-section (1) from the basic wages dearness allowance and retaining allowance (if any) payable to an employee employed by or through him or otherwise to recover such contribution or charges from such employee.

Therefore you are required to recover from contractor the amount of employer contribution (you can deduct from the payment of contractor i.e. from security agency and labor supplier or subsequently you may recover)

Here also Liability is yours for deposition of PF.

Your limit increased in January therefore you are required to deposit PF from January month retrospectively.

You can recover TDS from employees but can't recover retrospectively the employer's contribution from employees as it is your liability.

Querist : Anonymous

Querist : Anonymous (Querist)

04 November 2011 Hi Vijendra,

Thanks for your reply.

However,CTC includes all the components. So after the Software Industry came into picture it is like the employer pays the entire salary after deducting p.t and tds.The moment P.F etc becomes applicable the same will be deducted and remitted,becuase this forms part of CTC

Please clarify.

Thanks & Regards.

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Querist : Anonymous

Querist : Anonymous (Querist)

04 November 2011 Hi All,

Can someone please answer the same.

Regards

VIJENDRA DARGAR

VIJENDRA DARGAR (Expert)
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05 November 2011 Salary is different from CTC. For the application of laws salary may have different meaning in different sections. So, one should be clear with the term 'salary' so as to understand the relevant law/section.

In the PF Act 1952

Salary Means basic wages, dearness allowance and retaining allowance (if any).

So, please read in detail the term DA, Basic Wage etc. under this act.