Sarat Kumar Sahoo (Chartered Accountant) (389 Points)
27 June 2012Can anyone help me on the following query?
My Company is a manufacturing of Garments. Every month new labor appointed but we are not taken them as employee of the company for first 2 month, after 2 months they will be considered in company payroll.
But the payment for intial 2 months is never accounted due to PF/ESI procedure.
Can we account it other than salary? Last year is almost more than Rs50 lac
HARISH BANSAL
(student)
(229 Points)
Replied 27 June 2012
No, we have to consider it a
salary...............
Vandana Mulchandani
(Finance Manager )
(9227 Points)
Replied 27 June 2012
Yes, you can account as contractual salaries deducting TDS @ 1% and the expenditure is allowed. If the amount paid to each labourer does not exceed the limit, till they are taken on roles (ie 2 months) no need to deduct TDS.
Sarat Kumar Sahoo
(Chartered Accountant)
(389 Points)
Replied 18 September 2012
If we accounted it as salary then we have to deduct PF/ESI and firm contribution.
If we are not deduct PF/ESI then contribution/penalty/interest will be impose by ESI/PF department because PF/ESI also applicable to contact labor.
CAclubindia
