21 May 2016
Hi We are a small IT company based out of Kolkata, West Bengal. We currently have 9 employees and will expand to 25 members next month. All of our employees draw a salary greater than Rs. 15200 per month, take away as of now (even for the new joinees). At the moment we have no breakup of the salary, everything is just "salary", and we dont use the terms - Basic, DA, HRA, Allowances, Bonus, Gratuity and Gross pay yet!
I had the following questions: 1) Is ESI applicable (from next month) in our case? If yes, shall we register for ESI and file zero returns every month? 2) Given the fact, PF will become applicable next month, is there a way we can have everyone's basic salary greater than 15000 per month and have not allowances/bonus/gratuity and still file Zero returns every month for PF. 3) If there is no way to escape from PF and ESI, how can we reduce the salary (as governed by the PF law) and still not have ESI applicable? I am referring to the link - https://www.caclubindia.com/experts/esi-exemption-limit-844490.esi which suggests that the amount deducted for PF will not be counted as salary for ESI purposes.
23 May 2016
Query (1): ESIC will not be applicable in your case even if the number of employees is extended to 25 employees as the ESI wage ceiling limit is Rs. 15000 per month. Employees drawing salary above Rs. 15000 is not eligible for ESI coverage. Hence in your case ESI registration is not necessary. Query (2) & (3) PF wage ceiling is Rs.15000 per month of salary (earlier it was Rs.6500). EPF becomes optional if employer pays salary of Rs.15000 per month. In your case this becomes applicable. Thus even if you have more than 20 employees, there is no need to register under PF. Your employees will be treated as excluded employees.
However, if you have establishment for more than 5 years and employees are associated with you for more than 5 years, you need pay Gratuity.
25 May 2016
Hi Amrita Thanks for the clarification! This helps. I had a couple of further questions with regards Query 2 and 3
1) Does that mean I need to register for PF, but file a "Zero" return every month? 2) If some of our employees are interested in contributing to PF, can we do it for only those selected employees?
25 May 2016
Query 1: You need not register for PF. Thus there is no requirement to file "Zero" return. Kindly ensure that the salary of the employees is above Rs. 15000 per month. Query 2: If the employees are interested in contributing to PF, they can opt for Voluntary PF contribution through creating a Trust
CAclubindia
