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Dear All HRM Professionals,
I have been facing lot of confusion over this issue.
I want to know can the employer's contribution of PF Fund be deducted from the Annual CTC of the employee???????
is it a good practice???
In my company this the practice, now in the Month OF July, every one's salary has been increased wef. 1st Jan 2012, i was supposed to calculate the PF arrears, i have calculated it by referring to the previous year calculation of the same. Similarly i was also asked to deduct the Employer's contribution for PF,
when i have completed all the work as per the previous format, accounts is replying that i should have deducted it from the annual CTC.
As per the previous format, employer's Pf contribution appears in the deduction column.
Pl guide me about the correct and legal process, i m the only person handling HR dept.
Pl help me.
14th August 2012 From India, Bangalore
Dear Sir, Thanks for replying. But its been deducting twice, before the calculation of monthly gross salary and also after the calculation of Monthly Gross. Is it legal????? Regards, Pallavi
14th August 2012 From India, Bangalore
why you are confused? kindly calculate on the basis of Monthly Salary. If any confusion then reply.
14th August 2012 From India, Ghaziabad
Dear Pallavi,
As per your issue
1. Increment on July effect date on1st Jan 12, you should deduct Employee PF as well as Employer contribution from 1st Jan for PF arrears and should not deduct from CTC. This contribution deducted from both parties.
2. How you can deduct from before the gross
a. Total Earning = Gross
b. Total Deduction
c. Grand Total = Net (take home)
And PF can't deduct from Annual CTC.
if any clarification please call me
14th August 2012 From India, Madras
Simply speaking, CTC is the amount that you cost your company. That is, it is the amount that the company spends – directly or indirectly – because of employing you.
Thus, it is the money given to you (your in-hand component), plus the money spent because of you.
14th August 2012 From India, Bangalore
Dear Sir,
Thank you so much for clarification!
I have done the same. Have deducted Arrears PF Contribution of both Employee and Employer from the arrears wages.
But my account dept. is asking me to deduct the employer contribution from the revised CTC itself.
14th August 2012 From India, Bangalore
Hi Pallavi Not to worry. deductions under CTC means total cost to the company. Don’t get confused. Deduct PF on Basic + DA. Calculate even employer contribution of PF so it is CTC.
14th August 2012 From India, Bangalore
Dear pallavi,
CTC means cost to the company it included all the amount which is incurred by the company to you. So both the employer and employees contribution can be deducted from the CTC. But the company cannot deduct the employer's contribution from the salary of the employees as per para 31 of the Employees provident fund scheme
14th August 2012 From India, Kochi
CTC does contain the share of PF employer share. it is industry practice. cost to company comprises of components like basic, d a , hra, allowcs, under gross salary and other components LTA, medical reimb etc under annual components also employer incurrs additional expenditure on employee contributions(as a whole in respect of all employees) like pf, esi, gratutiy, Health insurance , life term etc if any.
As these are a part of CTC, whenever the revisions takes place retrospectively you can calculate and arrive employer share pay arrears as per the Act.
15th August 2012 From India, Hyderabad
Hello Pallavi,
CTC includes both employee and employer PF contribution. From Jan to July you had already deducted PF on regular basis. Now you have to calculate and deduct PF(employee and employer's contribution) from arears only.
16th August 2012 From United States, Cambridge
Dear All HRM Professionals,
Thank you so much for the guidance & support.
Kindly request you to go through the PF arrears calculation sheet attached herewith.
Pl tell me which is the appropriate way to calculate PF Arrears.
16th August 2012 From India, Bangalore

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File Type: xls PF Arrears Calculation July 12.xls (90.0 KB, 698 views)

Hii Pallavi.
We have already made max contributions in our monthly returns for each employee. if an employee gets arrear payment in month of april, then do we want to contribute any amount regarding the arrears, plz clarify i was bit confusing about this.
HR Executive
13th May 2014 From India, Hyderabad
As we have revised salary as per minimum wages 2018-19 during June-18, So as the minimum wages w.e.f April-2018 how about the arrears pf calculation as per minimum wages. Kindly help us in this regarding
30th June 2018 From India , Bellary
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