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Labour contract esi and pf contribution

Nandeesh A. B. (Executive Accounts,) (59 Points)

19 January 2016

Dear Sir/Madam, I am an employee in a manufacturing company, my salary is 11,000. And my salary is been given from an contractor that my company has contracted with and i get my account only Rs. 9090. His confirmation towards the payment is BASIC + DA = 6341 Other allowances = 4659 ESI @ 1.75% on 4659 = 82 ESI @ 4.75% on 4659 = 221 PF @ 12% on 6341 = 761 PF @ 13.36% on 6341 = 847 So my Take home comes to 11,000 - 1,911 = 9089. The problem is why i should contribute 13.36% and 4.75% towards PF and ESI. kindly give me clarifications regarding this.

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CMA Poornima Madhava (CMA) (13117 Points)
Replied 19 January 2016

So it basically means that you are formally employed with the contractor (not the manufacturing company) since contractor is paying you salary.
As I understand, ESI @ 4.75% and PF @ 13.36% are to be contributed by the employer (i.e. contractor in your case) and if not, then the principal employer (i.e. the manufacturing company). It is incorrect the deduct employer's contribution from the salary of the employee.
Employer can only deduct 1.75% towards ESI and 12% (or 10% as the case may be) from the salary of the employee.

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