Personal employer vs registered employer

Domestic help in India falls into a distinctive employment category, the worker is genuinely employed (under common-law tests of control and dependence) but the employer is a household, not a business. This affects nearly every regulatory area:

• Income Tax, domestic help wages are a personal expense; you cannot deduct them against any income head. Receipts matter for the worker's records, not the employer's tax savings.
• EPF, the Employees' Provident Fund Act applies to establishments with 20 or more employees. A household with one or two domestic workers is not an "establishment" under the Act and is not required to register.
• ESI, Employees' State Insurance applies in notified areas to establishments with 10+ employees. Single-employer domestic workers are typically outside ESI.
• TDS, Section 192 TDS on salary applies to employer-employee relationships. Personal employers paying domestic wages below the basic exemption (₹2.5 lakh / year) don't need to deduct TDS in any case. Above it, technically TDS applies, but the practical compliance is rare for personal employers.

Minimum wages, state-specific

Minimum wages for domestic help are notified state by state, often by the Domestic Workers' Welfare Board (where one exists) or the state labour department. The rates vary widely:

• Karnataka, Notified minimum wage for "domestic worker" categories under the Karnataka Domestic Workers' Welfare Act 2020.
• Tamil Nadu, Domestic Workers' Welfare Board minimum wages by city tier.
• Kerala, Welfare Fund Act with monthly contribution from employer + worker.
• Maharashtra, Domestic Workers' Welfare Board rules with notified rates.
• Most other states, guidelines but not enforceable minimum wages.

Where a state board exists, it may also require employer registration, social-security contributions, and dispute mechanisms. Always check your state's current rules.

Cash payment thresholds

For personal-employer wages:

• Section 40A(3) (₹10,000/day cash limit on business deductions) does not apply to personal employers because there's no business deduction at stake.
• Section 269ST (₹2 lakh aggregate cash receipt by single person) does apply. A worker receiving above ₹2 lakh in cash from a single household in a single transaction or for a single event would be on the wrong side of this. Annual wages aren't typically structured to trigger it, but festival bonuses + arrears can.
• Best practice: use UPI or bank transfer for any wage payment above ₹10,000. The audit trail protects both employer and worker.

What the receipt should contain

• Worker's full name and address
• Worker's ID reference (Aadhaar last 4, voter ID, or PAN, full ID number is sensitive, last 4 is enough for identification)
• Employer's name and address (the household)
• Period of work covered, typically calendar month
• Days worked (relevant if part-time or pro-rated)
• Basic monthly wage
• Festival bonus / ex-gratia if any
• Advance adjustment (if any)
• Net amount paid
• Mode of payment, cash, UPI reference, bank transfer reference
• Worker's signature (or thumb impression) acknowledging receipt

Section 17(2) perquisite, the rare case

If your employer (a company) provides domestic help to you as part of your salary package, the value of that help is a taxable perquisite under Section 17(2). This is rare; mostly seen in the C-suite of large companies or diplomatic households. The valuation is the actual cost to the employer minus any amount recovered from the employee. The household keeping wage receipts in this case is also useful for the company's audit.

Common mistakes

• Trying to claim domestic help wages on your tax return. Personal expense; not deductible.
• Skipping wage receipts because the worker is "informal". A signed monthly receipt protects both parties in any future dispute.
• Paying cash above ₹2 lakh in a single transaction. Triggers Section 269ST for the worker.
• Recording the worker's full Aadhaar number. Aadhaar Act prohibits storing the full number except where authorised. Last 4 digits is the safe practice.