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Dear All,
Does the employer contribution to PF form part of CTC?
What I am trying to understand is that can the employer deduct organizations contribution to the PF from the CTC.
Plz give your inputs as to what is being followed in your respective organizations. Specifically for IT, service, BPO industry
Await your responses.
Regards
Nidhi
21st June 2007 From India, Gurgaon
Hi, Yes. The Employer Contribution to PF is the part of CTC(Cost to the company). The CTC concept introduced to calculate the cost of each employee to the company. Murali.
21st June 2007 From India, Hyderabad
Dear Ms Nidhi,
CTC include all cost or expenses incurred for the employee.
PF contribution, liability towards gratuity, ESI (if applicable) - employer's share , if tax part is born by employer it will be a part of CTC.
But it does not include any incentive or appriciations amount linked with annual performance.
21st June 2007 From India, New Delhi
Dear Nidhi,

Employer's pf is includive part of CTC, as well i am disagreed with nn_tiwari's comment.

There is no rule specified for what componant are inclusive or exclusive, its always depend upon compan's culture.

So far perfomance bonus and fixed incentives are also part of CTC.

When as a candidate you resume interview, you always show them CTC structure and facility available from employer.

e.g. Suppose i am with the "X" compnay and they had given me accomodation facility. and in interview "Y" company as a policy if they don't provide accomodation, then they will include such amonunt in salary structure by which offer will be made.

exploring in detail

Suppose X person's salary is 10000,

company accomodation lease povided 5000

X person's new offer from other company will be more than 15000, They have to calculate salary increament on 15000 not on 10000.

As well if you provide them certain fix incentive, like petrol allowance, 1000 per month, it will be a CTC part from employer.

Therefore it depends upon compnay to company and policy to policy;

Regards

Virendra
21st June 2007
Hello everyone.
i agree with Virendra, this is how practical offers are being made. an employee may / may not count while working with company, but when he search out for job, he will definately include those fix amount in CTC and expect rise on that amount. and it's appropriate too....
however, i agree with Nidhi also, only thing is that there are various practices being adopted by organizations depending up on their management decisions.
Cheers !!
Gaurang
22nd June 2007 From India, Vadodara
CTC - Cost to the Company
It includes everything that the employer tends to pay to a particular employee during the course of one year. This includes, employers contribution in PF and ESI. Sometimes, employers agree to pay the TDS...even that is included in CTC. Cost of Furnished House; Car; Magazines etc. These all are included in CTC.
Regards
Sanjeev Sharma
22nd June 2007 From India, Mumbai
Dear Nidhi
There are 2 ways to convey compensation to an employe. Gross Salary & CTC. In Gross salary 1 part of PF from employee side is deducted, Employer adds his own part and deposits.
IN CTC both parts - Employer & Employee are included & both the parts are deducted and deposited.
CTC is more prevelent in IT & related industries more as a matter of administrative convenience. It does not in any case affects employee's financial income.
Sandeep
22nd June 2007 From India, New Delhi
Dear All,
Thanks a lot for your inputs, it definitely gives me a better understanding of the subject.
Request you to share with me a salary break up as to how we should be presenting the same to the employee. Usually the Salary break up shows only one deduction for PF from the CTC.
Hope to get your help in this as well.
Warm Regards
Nidhi
22nd June 2007 From India, Gurgaon
Hi Nidhi, CTC means cost to company. So whatever company spends on the employee. I am attaching herewith salary break up which we give to employees. Hope this will help you regards Madhuri
22nd June 2007 From India, Mumbai

Attached Files
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File Type: xls salary_breakup_for_employee_143.xls (21.5 KB, 6703 views)

Hi All,
I have another question raised seeing this discussion.
Virendra mentioned about the Increments. How are increments calculated? Is it on Gross Salary or CTC?
If some one is getting a fixed allowance ( Legally the Term ALLOWANCE) does the Employee have to submit Bills for the same?
And to Virendra I guess Incentives and Allowances are/Should be categorised under different heads. ( correct me if am wrong).
Vijay
22nd June 2007 From India, Hyderabad
Hie Vijay,
Though ur question is to Virendra. But I would like to present my views to that.
The company can calculate the Increaments on either Gross or CTC amount. Its completely on company's discretion. It also depends on how are u compansating ur employees, ie gross or ctc wise. Normally a percentage of the CTC is increased annually.
Bills are generally submitted for reimbursement benefits and not for allowances.
Definitely allowances and incentives are two different heads. An incentive can be fixed or variable (if performance based) while an allowance is normally a part of the salary which is usually kept fixed.
I hope i was able to suffice you a bit.
Regards,
Parul
22nd June 2007 From India, Delhi
Hi All,

I have another question raised seeing this discussion.

Virendra mentioned about the Increments. How are increments calculated? Is it on Gross Salary or CTC?

If some one is getting a fixed allowance ( Legally the Term ALLOWANCE) does the Employee have to submit Bills for the same?

And to Virendra I guess Incentives and Allowances are/Should be categorised under different heads. ( correct me if am wrong).

Vijay

Dear Vijay,

1. First of all if we are discussing about increment then its really a wast subject to understand. See, first of all after appraisal, you can able to dicided how to proceed. as per present trend you need to calculate minimum and Maximum % rise in salary with exeptional cases of non peroformer and excellent performer. Generally all this things depends upon the profits gain by the company. Then you have to rank employees as per performance who will get what. Generally increments are calculated on gross as well CTC, to get quantitive figure it is calculated on CTC, then as per latest trend it is calculated on gross permonth, as what exact rise employee is getting.

2. See some allowances are tax free (food coupon, travel etc) for which employer always ask for receipts and bills, and others may be rendered as salary componant, say education allowance, wash allownace etc, Now its depends upon your need as what objective you are serving; Any how Tax is a thing, which either employee has to pay or employer, considering that only salary structures are being made.

3.Incentives and allownces are always categorised as per level, there is no second opinon. If manager will travel from one destination to other his mode will be different and if peon then it will be different. But some incentives are specially in serivce industry say retail, hotel, are given with equall amount. @ target achievement incentives. such incentives may be given in terms of cash or by the suggestion of the group.

regards

Virendra
22nd June 2007
hi,
ctc included all the benifit what a company pay to there employee. its included pf contributin, esi contribution(if applicable), LTa and others fringe benifts.
all montery fund what are paied by the company for an employee comes in ctc(Cost To Company)
for more information mail me at
bye.
deepak malik
23rd June 2007 From India, Pune
Hi Madhuri, It was nice to see the salary breakup of your company,however can you explain on what basis HRA is being calculated. Normally it is 50% of basic sal in metros. Regards Arya
23rd June 2007 From India, Chennai
Cost to the company or CTC as is popularly known is the way the company determines the cost which it has to bear before it employees a person.Now this cost to the company is broken up in such a way that even after discharging the statutory liabilites like contribution to CPF, Contribution to EST, Payment of Bonus the cost to the company remains the cost determined before hand.It must be understood that once the ctc is broken, the company will have to discharge the statutory liabilites based upon the pay structure created. For instance the limit for contribution to ESI is Rs.6500 as on date. Suppose tomorrow the limit is increased to Rs. 10000, the company will be at liberty to change the pay structure and will have to make the contribution on the enhanced amount. Though the company may at a later date when the annual increment etc is due may grant a lower increment to an employee to make up the loss of such contribution.
Deepak Thukral
24th June 2007 From India, Chandigarh
Yes.
Employer contribution does form part of the CTC.
CTC is the Cost To Company in totality that the employee would cost the company.
Infact you will have many employees argue with on this very same point,
stating that
1. As this contribution is part of the employer, why is it mentioned in the CTC?
2. The CTC looks very rosy, but ultimately the in hand package is not big shakes.
Here is where the negotiation skills of an H.R. person comes into play. Its very important as part of H.R. to let the employee know what exactly his in hand would be. You don't want to re start the entire recruitment process a week after the employee joins, cause you may just realize, HE HAS BEEN PICKED UP BY ANOTHER COMPANY....
The above is a fact right? :)
www.ralstonraz.blogspot.com
25th June 2007 From India, Mumbai
Employer contribution is always the part of CTC but not the part of Gross salary. Regards Manish
26th June 2007 From India, Delhi
Dear Ms. Nidhi,
The term CTC itself mentions Cost To Company. Most of the companies include every cost that is borne by the company for a particular position / employee. Now it is upto your company what to include & what to exclude. Generally PF is not excluded.
Exclusions are insurance or subsidised canteen or transport. But I feel even these should not be excluded if you are under CTC structure.
Coming to your question. If you are following GPA system then you should exclude PF in CTC system NO you can't.
Regards,
Swati

27th June 2007
Hi,
A question which is answered a couple of times on this forum. CTC is nothing but the cost to the company. It should include the gross salary, the employer contribution of PF, any Performance based incentive, any other perks which the employee gets on joining the company. So, answering your question, Well...Employer contribution of PF (12% of (Basic + DA)) is included in CTC.
Regards,
Avi
27th June 2007 From India, Bangalore
hello all
can anybody help me
our company deducted PF for march and april but we got registration from may so we refunded employee contribution. My question is pf deducted as emplyer contribution from ctc should be refunded??
please advise.
26th October 2010 From India, Hyderabad
A notification is issued on 18th March, 2014 after the approval of CPFC in order to clarify provident fund contribution under section 6 is not payable on Cost to Company (CTC). Below is an except of the notification. Regards, Hidaytulla Baig
7th October 2014 From India, Brahmapur
if bonus is part of ctc pf and esi will be applicable on same or not
16th December 2016 From India, Moradabad
Hi,
I have query that whether Gratuity is deducted from monthly salary or not.
If it is. Please explain me why it is???
5th January 2018 From India, Bengaluru
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