Janarthanan .v
Human Resource Business Partner
Hr Manager
Recruitment, Er, Generalist
Human Resource Management
+2 Others

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Dear Seniors,
We have recently raised the salaries of our employees. However as per the new PF rules, PF deductions should be done on atleast the minimum wages.
The current minimum wages in Gujarat is Rs. 4550/-
As per the new PF rules if I have to calculate the salary of an employee having a CTC of Rs. 5000/- or Rs. 4750?- how do I go about it?
The various salary heads in our company are :
Basic (60% of CTC), HRA (40% of Basic) & the rest is treated as other allowances which together form the gross salary of the employee.
Out of this 12% of basic is deducted as PF, ESI (1.75% of gross) and PT as applicable.
If the CTC of an employee is Rs. 4750 or 5000/- how do I consider all the components of employee earnings (Basic will now become 4550/- (Minimum wages as per PF rules) and how do I work out the salary structure.
Please guide

if gross salary is 5000/- define the basic salary equal to minimum wages and rest amount can be paid as other allowances. you can also divide minimum wages in Basic and DA, but make sure that u calculate PF on both the heads (Basic+DA)
Else let the min. wages be under one head only i.e. basic.
you can surly put some amount under other heads if your company wish to pay as an increment otherwise let other heads remain zero.

Dear Saunee,
Thanks for your reply.
My dilemma is
CTC - Rs 5000/-
Basic - Rs 4550/-
HRA - 0
Other Allow - 0
Gross - Rs. 4550/-
PF (Employee Contr.) = 12% of 4550 = Rs. 546
ESI (Employee Contr) = Rs. 80/-
PT = Rs. 20/-
Take home = 4550 (Gross) - 646 (Empl. Deductions) = Rs. 3904/-
Co. Contr. (PF) = 12% of 4550 = Rs. 546
ESi (Co. Cont) = 4.75% of 4550 = Rs. 217
Now CTC = Take home + Employer Contributions = 3904 + 546 + 217 which becomes Rs. 5313/-
whereas my CTC has been fixed at 5000/-
Hope you have now understood my real problem on how to adjust CTC without reducing Basic salary below minimum wages???
The same problem goes for any CTC less than 5300/-
Kindly revert

Is PF applicable for contract employees ? If not applicable, take them in contract and once you make them permanent raise the CTC and make the components as per CTC.
The total CTC will Be
Gross 5000
ESTB Shar EPF 619 (13.61%)
Estb Share ESI 238 (4.75%)
PT 20
Total 5877
Note: in some of the companies, leave & bonus is also a part of CTC.
Harkishan Tanwer

Dear Mr.Tittli
The quantum of Minimum Wages and the employer's contribution are constants on which you have no control. On the other hand you want to keep the CTC as constant and are trying to fit in the minimum wage and the employer's contribution within the CTC. This is not possible always. You should have decided on the CTC based on the existing/future minimum wage
With regards

Dear All, I agree with Mr. V.Harikrishnan’s opinion. In certain emoluments we have no control, since minimum wages in a One Package. Thanks & Regards, Jana V

Attached Files
File Type: doc PF Amendment dated may '11.doc (31.0 KB, 1584 views)

agreed to Harikrishanan,
Your CTC is too low to fix all the statutory deductions including basic which is now has to be equivalent of Basic salary.
you need to increase CTC of employees to do minimal adjustments in salary.

Thanks to all of you for your valuable response.
However, I have not understood one thing --- govt. organizations employee people on contract, pay them below minimum wages at times and do not deduct PF.
How is this taken care of by govt. organizations when they insist that private organizations have to follow all the rules, pay minimum wages, deduct PF /ESIC etc as and when applicable. I am aware that they do not employ people on their roles directly but on contract bu PF rules state that even for people on contract, the PF has to be deducted from day 1 then how is t=it possible for govt. to flout the rules
Kindly advise
Thanks & Regards.

Hi All,
I am contractor and suppose on of my employee salary is 2000 then how can I find below details or what calculation should I use to create ECR and please tell what is percentage should I consider below to calculate. That will be great help if you tell me these things
1. Gross Wages :: 2000
2. EPF Wages
3. EPS Wages
4. EDLI Wages
5. EPF Contribution
6. EPS Contribution
7. EPF_EPS_Diff_Remitted
8. NCP Days
9. Refund of Advances

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