Sir,how much cash pay to labour weekly new building of factory (Assets),all labour person out of EPF/ESI,can we pay to labour payment 40k per week thru musterroll
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Cash payment weekly 40k to factory expension site labour ,labour out of EPF/ESI
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| This raises issues under both Income Tax and Labour Law. Here is the full analysis: 1. Section 40A(3) — Cash Payment Disallowance: - Cash payments exceeding Rs. 10,000 to a SINGLE person in a SINGLE day are disallowed under Section 40A(3) - Rs. 40,000/week to multiple individual labourers is allowed IF each individual labourer is paid less than Rs. 10,000 per day in cash - If you are paying one contractor or labour supplier Rs. 40,000 in cash (as a single payment to one person), Section 40A(3) disallowance applies on the excess above Rs. 10,000 - Maintain wage register with individual names, amounts paid, and signatures/thumb impressions to establish that no single person received more than Rs. 10,000 per day in cash 2. EPF/ESI on Construction Labour: - EPF applies to establishments with 20+ employees. If your factory expansion uses 20+ labourers (including through contractor), EPF applicability must be checked - Daily wage/casual labourers on construction sites ARE covered under EPF/ESI if the establishment meets the threshold — 'out of EPF/ESI' applies only if genuinely below threshold or specifically exempted - Engaging a contractor? The principal employer is responsible for EPF/ESI compliance of contract labour 3. TDS: If total payment to a single contractor for labour exceeds Rs. 30,000 in one transaction (or Rs. 1 lakh in a year), TDS under Section 194C @ 1% applies 4. Practical Advice: Shift to bank transfer/UPI for labour payments where possible — avoids disallowance risk, creates audit trail, and is increasingly expected. |
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