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Compliance requirement for manpower deployment at co

Prashant (Accountancy and auditing) (146 Points)

04 February 2016

Need some inputs with reference to compliance point of view under audit regarding manpower agency depolyment in company

1) What are the compliance points required to be followed in case of appointment of manpower agency ie. housekeeping, security agency

2) Is it mandatory to sign the contract?

3) Is Purchase order valid document sufficing the compliance need. Or contract will be mandatory

4) Is it mandatory to obtain the PF and ESIC challans of vendor agency.

5) If manpower service provider does not pay the PF and ESIC will it create problem for principal employer.

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1 Replies

PRADEEP KUMAR VATS (Assistant manager) (430 Points)
Replied 09 March 2016

Hi Prashant

Following are replies pointwise in my opinion :-

a) To ensure compliance of service tax on Reverse charge basis provided your service provider should not be a company(refer notification 30/2012). Further ensure TDS deduction.

b) Yes, it is necessary otherwise how could you ensure that bill raised by agency is as per the terms and condition and not prejudicial to the interest of the company.

c) PO can be acceptable or not. Yes it is one of the criteria to check the authenticity of the aggrement and expenses debited to the books of accounts. However, There should be a signed aggrement.

d) I have seen such type of contract , where it was decided between the parties that PF and ESI liability will be borne by agency concerned and in case not paid by the agency it will transfer to the company where such employees are working. You will see with each bill agency will attach the challan of previous month because at the time of raising of invoice they have not paid the liability of PF and ESI. E.g. For may 2015 bill raised on 01.06.2015, however due date of PF and ESI liability will be 20th or 21st. So every auditor will ensure wheather PF and ESI paid by agency or not.

e) For last point refer abover (d) point.

So, Hope you get the answer of all your question.

Pradeep Kumar