IT Firm - General Queries - Payroll, Statutory Taxes

Hello Team,
I have couple of questions for our IT Firm.

  1. We have included only 3 components in salary breakup (BASIC, HRA and SPECIAL ALLOWANCE). Is it mandatory to add any more components?
  2. We do not declare the bonus beforehand. We give away bonus during Diwali as per Company and Individual employee performance. Is this practice accepted?
  3. Our firm is not yet eligible for PF or ESIC. Is that fine to not apply for PF/ESIC if we don’t exceed 20 employees?

Thanks in Advance.

5 Likes

Hi Nehal,

I find this discussion might address your first question- please check- Mandatory components in Payslip

For other questions, let us wait for the members to guide you better.

Regards,
Anu

3 Likes

Hi @sacchasona

Thanks for your question, I will try my best to answer this.

Question #01: 1. We have included only 3 components in salary breakup (BASIC, HRA and SPECIAL ALLOWANCE). Is it mandatory to add any more components?

All the necessary components are added. Since Medical as a component is not mandatory no problem on this.

Question #02: We do not declare the bonus beforehand. We give away bonus during Diwali as per Company and Individual employee performance. Is this practice accepted?

You need not convey the bonus amount in advance - but as per statutory you might have to follow some guidelines which I’ve shared a link at the bottom for detailed explanation.

Question #03: Our firm is not yet eligible for PF or ESIC. Is that fine to not apply for PF/ESIC if we don’t exceed 20 employees?

Not mandatory if you’re not in the slab for compulsary compensation - but in-order to attract talents and retain employees - safeguarding their future you might think about them :slight_smile: as now almost all the companies offer them as a basic benefit.

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further to the above question , I have one doubt .

If we have more than 20 employees but none of their Basic/DA salaries are within the Coverage Limit ie. Rs. 21000/-. Do we need to obtain. ESI Registration.

Thanks in advance.

2 Likes

Hi ,

You need to get it enroll if you have a employee of 10+ in your organization and all the employees Basic+Da is more than 21000.-.

Need to file Nil returns.

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Yes you will need to obtain ESI registration even if the Gross salary of all your employees exceed the coverage limit of Rs. 21000

ESI Act is applicable to every establishment/factory employing 20 or more persons (10 in some states), irrespective of the wage. While Gross wage of Rs. 21000 and below is the criteria for coverage of an employee under the ESI Act, it is not the criteria for applicability of the Act to an establishment/factory.

Regards

Deepa

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Thanks a lot for your replies.

Regards

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