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How to pay salary in a sole PROPRIETORSHIP firm

Anil (Businessman) (26 Points)

27 October 2009

I own a sole proprietership firm in my name (registered through Shop Registration Act). It is an Academic

Research company serving cleints from all over globe. How do

I pay salary to my employees. Are there any legal formalities to be done?

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8 Replies

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 27 October 2009

It is better to pay salary to ur staff through bank mode and check whether PF & ESI Act will applicable to u or not.

regards,

ratan

G.Ramesh (Accounts Professional) (1089 Points)
Replied 27 October 2009

Dear Anil,

Go through the minimum wages act , PF is applicalbe if the establishments employing 20 or more persons.

COVERAGE UNDER THE ESI ACT, 1948

The Act was originally applicable to non-seasonal factories using power and employing 20 or more persons; but it is now applicable to non-seasonal power using factories employing 10 or more persons and non-power using factories employing 20 or more persons.

Regards

1 Like

Anil (Businessman) (26 Points)
Replied 27 October 2009

Thanx Ramesh and Ratan,

Right now my firm has only 5 employees. I want to ask one more thing.

Do I need a TAN number to pay salary to my eployees. And if they ask for

salary slip what kind of salary slip do I give them? And do I have to deduct

taxes while paying salary.

IT retu

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 28 October 2009

Dear Anil,

yes, u are required to get TAN No. TAN No. is required for filing TDS return with income tax department. As mentioned in your question, u will deal with various type of clients and it may be possible that u require service of some professional or other outside parties for smooth conducting of your business. As pfar as TDS on salary is concerned , it depends on salary structure of ur employee as decided by you.If the follwing limit exceeds u have to deduct tax:-

Male employee: Rs. 160000 or more p.a.

Female Employee: Rs. 190000 or more p.a.

senior citizen : Rs.225000 or more p.a.

Best regards,

ratan

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 28 October 2009

You may issue salary slips to your employees.

regards,

ratan

G.Ramesh (Accounts Professional) (1089 Points)
Replied 29 October 2009

I Think TAN number is not required for Sole Propritership, PAN Number of the proprietor is enough...can any expert pls clarify this-Thanks

Mohd Sarfaraz Latibani (Tax Consultants) (284 Points)
Replied 28 April 2010

NO TAN is also required for proprietor ship concerns. As Tax is to be deducted from employees salaries and ahs to be deposited into the central govt account.So it is mandatory to deduct TDS from employees if applicable and apply for TAN.

Narayanan (Senior Executive) (22 Points)
Replied 04 July 2012

HI I am working under Sole propreitorship ..............registered under shops and establishment.........I would need to know the Tax exemptions for Individual Salaried employees..................and also if the company pays the tax once for the year say for a total amount of 1200000 after deducting all expenses without paying advance tax what could be the total fine???