The simpler way is to treat dat person as a contractor and to deduct the TDS @ 1% u/s 194C..only.
This is B'coz. if he is registered as an employee in d payroll register , it 'll be necessary to register him under PF rules, ESIC...rules..and other applicable Labour laws of the country..This will increase administration cost for the company..without any direct or indirect benefit...from such an employee... from INCOME TAX point of view..- it 'll b allowed as an expense in any way...
It is better to avoid such a situation and deduct TDS @ lower rate and treating him as a third party..i.e. - CONTRACtor..
CAclubindia
