Gratuity, PT, PF, ESIC, GST and Shop & Establishment Act and Bonus
Gratuity
An amount of salary (basic salary + dearness allowance) equal to half the months of the
year in which service is given is given as gratuity. For example, on
33 years of service, a gratuity will be equal to the salary of maximum sixteen
and a half (16.5) months.
Under the gratuity act
1972, every establishment with more than 10 employees has to provide gratuity
to its employees. Once a person works for more than 5 years in an organisation,
he/she becomes eligible to receive gratuity.
It is the sum that is paid to you when you
retire or leave an organisation.
It is the sum paid to an employee when he/she
retires or leave an organisation. The limit on gratuity that can be given to a
person is 10 lakhs.
Professional tax
Professional tax is levied by particular
Municipal Corporations and majority of the Indian states impose this duty. It
is a source of revenue for the government. The maximum amount payable per year
is INR 2,500 and in line with tax payer's salary, there are predetermined
slabs. It is also payable by members of staff employed in private companies. It
is deduced by the employer every month and sent to the Municipal Corporation.
It is a mandatory to pay professional tax. The tax payer is eligible for income
tax deduction for this payment.
Applicability of Professional Tax as per the
Constitution of India: Article 276 of the Constitution of India lays down that
“there shall be levied and collected a tax on professions, trades, callings and
employments, in accordance with the provisions of this Act. Every person
engaged in any profession, trade, calling or employment and falling under one
or the other of the classes mentioned in the second column of the Schedule
shall be liable to pay to the State Government tax at the rate mentioned
against the class of such persons in the third column of the said Schedule.
Provided that entry 23 in the Schedule shall apply only to such classes of
persons as may be specified by the State Government by notification from time
to time.”
Amount of professional tax
The professional tax is a slab-amount based on
the gross income of the professional. It is deducted from his income every
month.Slab for professional tax varies across different states in India. Click here for
details of professional tax in different states.
Who is responsible to deduct Professional Tax?
The owner of a business is responsible to
deduct professional tax from the salaries of his employees and pay the amount
so collected to the appropriate government department. He/she has to furnish a
return to the tax department in the prescribed form within the specified time.
The return should include the proof of tax payment. In case the payment proof
is not enclosed, the return shall be deemed incomplete and invalid sec 16(iii).
Penalties for Non-Compliance on Professional
Tax Payment
Delays in obtaining Registration Certificate,
a penalty of Rs. 5/- per day. In case of non/late payment of profession tax,
penalty will be 10% of the amount of tax. In case of late filing of returns, a
penalty of Rs. 1000 per return will be imposed if you filed after due date in 1
month. after 1 month, penalty should be rs. 2000 will be imposed(from
01/04/2015) (Maharashtra: Profession Tax Act 1975).
Professional Tax Maharashtra
|
Monthly
Salary |
Professional
Tax Levied (Per month) |
|
Up
to Rs. 7,500 |
Nil |
|
Rs.
7,501 to Rs. 10,000 |
Rs.
175 |
|
Above
Rs. 10,000 Women who earn salary up to Rs. 10,000/- per month are exempted
from paying professional tax |
Rs.
200 for all months other than February Rs. 300 for the month of February |
Provident Fund
Employee
Provident Scheme is mandatory for an employee with basic pay of less than 15000. Most prefer to set aside savings through EPF
with an 8.5% interest rate. Employees prefer mostly 12% or 10% of basic pay, an
employer also pays equally 12% of basic pay ( 8.67 % to EPS, 3.33% to EPF ).
EPF Limits:
1. 8.33% from the employer's share of
Provident fund contributions of the total salaries that is limited to Rs.
15,000 each month is sectioned and contributed towards the Employees' Pension
Fund.
2. A payment of 0.5%, of the total wages
amounting to a maximum of Rs. 15,000 has to be done by the employer every
month, against the Employees' Deposit Linked Insurance Scheme.
3. Under the Employees' Deposit Linked
Insurance Scheme a maximum of Rs. 3,60,000 per annum.
4. 12% of the basic pay, Daily Allowance , food concession along
with retaining allowance, if there are any, can amount to a maximum of
Rs.15,000 each month is to be paid by the employer and the employee against EPF
contribution.
ESIC
ESI
Registration is mandatory for employers having 10 or more employees. For all
employees earning Rs. 15,000 or less per month as wages, the employer must contribute 4.75% and the employee must contribute 1.75%
towards ESI.
Employees’ State Insurance
Act, 1948 (ESI Act) is a social security legislation aimed at providing
benefits to employees in case of sickness, maternity, employment injury and
certain other related matters. Under this self-financing health insurance
scheme, funds are primarily built out of contribution from employers and
employees. ESI fund, maintained by ESIC, is applicable to employees earning ₹21,000 or less per month to
provide the cash and medical benefits to them and their families. This fund is
a contributory fund in which both the employer and employee contribute 3.25%
and 0.75% respectively to make it a total of 4%. For ESI calculation, the
salary comprises of all the monthly payable amounts such as basic pay, dearness
allowance, city compensatory allowance, HRA, incentive allowance and meal
allowance. The salary, however, does not include the annual bonus, retrenchment
compensation, encashment of leave and gratuity. ESI will be calculated for the
total gross salary of the employee.
· Employee Contribution: 0.75 %
· Employer Contribution: 3.25 %
Employees’ State Insurance Scheme will be
calculated for ₹21,000 of the gross salary. If Gross is above ₹21,000 ESI will be
constant.
ESI Calculator
Gross Pay ₹50,000 /Month
ESI Contribution
Employee 0.75% of 21000: ₹157.50
Employer 3.25% of 21000: ₹682.50
Total ₹840.00
GST, CGST & SGST
The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case, the dealer collects Rs. 1800 of which Rs. 900 will go to the Central Government and Rs. 900 will go to the Maharashtra Government.
Maharashtra Shop and Establishment Act, 2017.
Purpose of the Act: To provide for the regulation of conditions of employment and other conditions of service of workers employed in shops, residential hotels, restaurants, eating houses, theatres, other places of public amusement or entertainment, and other establishments and for matters connected therewith or incidental thereto.
For establishments with 10 or more employees, registration under the act is necessary. This registration can be taken for a period ranging between 1 year to 10 years.
For establishments with less than 10 employees, an intimation of having commenced the business is required to given at the portal. Good thing is that this intimation does not expire and stay valid unless and untill any of the following condition is fulfiled:
a. No of workers increase to 10 or more
b. Business is closed
Along with this you will have to intimate the department about any important changes in the particulars of the registration or intimation happened after obtaining them. This may include change of address of business, change of ownership, change in the nature of business, etc.
When the business is closed you will have to apply for intimation of closure of business.
- The company is at least 5 years old.
- The company has at least 20 employees.
- The company has made a profit in that year.
- The employee's wages are not more than 21,000 every month.
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