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PF deducted by Client. Now What will be treatment????

Shailesh (CA Final) (127 Points)

18 July 2011

Hello Dear Friends,

I have a question regarding PF. My one friend is providing Information Technology related services to his clients. Basically, He installs LAN etc. on contract basis. One of his client deducted PF from contracted amount and paid remaining for services provided.

My Questions are...

1. Whether PF liability arise to contractee while providing services to him (with reference to above case)?

2. If contractee has deducted the above amount then what will be treatment of transaction in books of account of service provider?

Thanks

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5 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 18 July 2011

if the contractor has own PF registration then produce the same to deductor, he wil make refund of same.

if the contractor has no PF coverage, then the deductor has been deemed principal employer for the workers of the contractor, in such case the contractor has to furnish the details of his employees worked with such company with details break up for the amount deducted. the company wil file declaration with PF department and the subject employees will get benefit under the PF coverage of deductor.