One of the my client is a public limited company. We are supplying Forklifts spares and service. Our company is Sole proprietor company not having permanent staff instead migrant. No once covered unders ESI & PF as we have less than 10 staff altogether including migrant mechanic.
The company deducted ESI ,PF and TDS without any notice.
TDS deducted including Spares supply portions.
Please advise legal validity points to have a discussion as well how to get refund. We took Star Health Medical policy for migrants and eligibility mechanics covering their Road Accident,industrail accidents.
11 July 2024
It seems like there are multiple issues you're facing related to deductions made by your client (a public limited company) for ESI, PF, and TDS without proper notice, and TDS deductions even on spares supply portions. Here's a structured approach you can take to address these issues:
### 1. ESI and PF Deductions:
- **Applicability of ESI and PF:** Since your company has less than 10 staff including migrant workers, it may not be mandatory for you to register under ESI and PF. According to the law, establishments with fewer than 10 employees (regular employees, not including contractual or migrant workers) are generally exempt from ESI and PF provisions.
- **Legal Validity:** You can discuss with your client that your company falls under the exemption criteria for ESI and PF, and hence deductions made in this regard are not valid. Request them to provide an explanation for why these deductions were made and seek a refund.
- **Documentation:** Prepare documents such as your company's employee list, including migrant workers, and any other relevant records to demonstrate that your company qualifies for exemption.
### 2. TDS Deductions on Spares Supply:
- **Nature of Deduction:** TDS (Tax Deducted at Source) is applicable based on the provisions of the Income Tax Act. For supplies of goods, TDS is generally not applicable unless the transaction falls under specific criteria such as specified goods (like minerals, scrap, etc.) or under Section 194C (contractual payments).
- **Legal Basis:** Review the contract or agreement with your client to determine if TDS deduction on spares supply is justified as per the terms agreed upon. If not, discuss with your client to rectify the deduction and seek a refund for any excess TDS deducted.
- **Documentation:** Provide invoices, agreements, and any other relevant documents to support your claim that TDS deduction on spares supply was not appropriate.
### 3. Approach to Resolve:
- **Discussion with Client:** Arrange a meeting or discussion with the concerned authority at your client's company.
- **Present Case:** Clearly explain the legal exemptions regarding ESI and PF for your company's size and the incorrect TDS deductions on spares supply portions.
- **Request Refund:** Request a refund for the deducted amounts along with interest (if applicable) due to the incorrect deductions.
- **Follow-up in Writing:** After the discussion, send a formal letter or email summarizing the points discussed, agreements made, and the expected resolution timeline.
### 4. Legal and Compliance Considerations:
- **Consultation:** If the discussions do not yield satisfactory results, consider seeking legal advice from a tax consultant or legal advisor specializing in labor laws and taxation.
- **Dispute Resolution:** If necessary, explore options for dispute resolution through mediation or legal proceedings to recover the deducted amounts.
### Additional Points:
- Ensure all communications are documented in writing for future reference. - Maintain records of all relevant documents and correspondence related to this issue. - Remain proactive and persistent in seeking resolution while maintaining professionalism and adherence to legal requirements.
By following these steps and presenting your case based on legal provisions and documentation, you should be able to resolve the issues of incorrect ESI, PF, and TDS deductions made by your client effectively.
CAclubindia
