Hello Everyone, I have a question regarding the deduction of the provident fund. According to the Provident Fund rules, the contribution is expected to be 12% from both the Employee and the Employer, based on the basic salary. Is there a rule that allows the Employer to deduct both contributions from the employee\'s salary?
Currently, I am employed in a private IT software company, working in HR. We are about to start deducting the provident fund, but our boss insists that both the employee and employer contributions will be deducted from the employee\'s salary. Could someone please help me understand the rules of Provident Funds?
Thanks,
Himani
From India, Rajkot
Acknowledge(0)
Amend(0)
1Currently, I am employed in a private IT software company, working in HR. We are about to start deducting the provident fund, but our boss insists that both the employee and employer contributions will be deducted from the employee\'s salary. Could someone please help me understand the rules of Provident Funds?
Thanks,
Himani
From India, Rajkot
Acknowledge(0)Amend(0)
Himani, The answer to your query is a big NO. It is startling to know that many Co is having HR without any basic knowledge of labor laws. Varghese Mathew
From India, Thiruvananthapuram
Acknowledge(1)
Amend(0)
From India, Thiruvananthapuram
Acknowledge(1)Amend(0)
Hello Varghese,
You are right. Actually, I have the basic knowledge that we learned in our education regarding this issue. I have informed my boss that it may not be possible, but he insists that it is working. I just want to understand the situation better.
From India, Rajkot
Acknowledge(0)Amend(0)
You are right. Actually, I have the basic knowledge that we learned in our education regarding this issue. I have informed my boss that it may not be possible, but he insists that it is working. I just want to understand the situation better.
From India, Rajkot
Acknowledge(0)Amend(0)
Dear Himani,
Warm greetings!
You have issued an Appointment letter to the Employee. In this, the salary part has been mentioned. In the CTC, you have included the PF component, which is 12% of Basic Pay for EPF. Out of this, 12% of Basic Pay, of which 8.33% or Rs. 541, whichever is less, is to be deposited. The remainder will also need to be deposited along with 12%. Hence, it has to be deducted from the Employee's Salary only.
CTC means Gross salary + Expenses incurred by the Employer on behalf of the Employee.
Please let me know if you need any further information in this regard.
Warm regards,
Pranab Chakraborty
9404384433
From India, Mumbai
Acknowledge(1)
Amend(0)
Warm greetings!
You have issued an Appointment letter to the Employee. In this, the salary part has been mentioned. In the CTC, you have included the PF component, which is 12% of Basic Pay for EPF. Out of this, 12% of Basic Pay, of which 8.33% or Rs. 541, whichever is less, is to be deposited. The remainder will also need to be deposited along with 12%. Hence, it has to be deducted from the Employee's Salary only.
CTC means Gross salary + Expenses incurred by the Employer on behalf of the Employee.
Please let me know if you need any further information in this regard.
Warm regards,
Pranab Chakraborty
9404384433
From India, Mumbai
Acknowledge(1)Amend(0)
Mr Himani, It is good to know that you have basic knowledge.Then show para 31 & 76 of the Employees Provident Fund Scheme to your boss . Varghese Mathew
From India, Thiruvananthapuram
Acknowledge(1)Amend(0)
From India, Thiruvananthapuram
Acknowledge(1)Amend(0)
Hi, If your company is following the CTC concept, then it is correct; else, it is absolutely wrong.
CTC = Gross Salary (Basic Salary + DA + Allowances) + Employer Contribution of PF + Employer Contribution to ESI + Annual Benefits (LTA, Medical Reimbursement, Bonus, Fixed Incentive), etc.
PF should be calculated on Basic Salary + DA, subject to a maximum of Rs. 6500/- or basic salary, whichever is less. (This limit can be extended at the discretion of the Company/Management).
Hence, the PF contribution from the Employee is: 6500 x 12% = 780. Employer Contribution is: 6500 x 8.33% = 541 + 6500 x 3.67% = 237 (Total of 780).
From India, Bangalore
Acknowledge(0)Amend(0)
CTC = Gross Salary (Basic Salary + DA + Allowances) + Employer Contribution of PF + Employer Contribution to ESI + Annual Benefits (LTA, Medical Reimbursement, Bonus, Fixed Incentive), etc.
PF should be calculated on Basic Salary + DA, subject to a maximum of Rs. 6500/- or basic salary, whichever is less. (This limit can be extended at the discretion of the Company/Management).
Hence, the PF contribution from the Employee is: 6500 x 12% = 780. Employer Contribution is: 6500 x 8.33% = 541 + 6500 x 3.67% = 237 (Total of 780).
From India, Bangalore
Acknowledge(0)Amend(0)
Praban ji & Beem ji,
CTC means Cost To the Company i.e exps that are incurred by the Co. for the e.ee… isn’t it ? When e.er contbn is shown in the CTC why shud the e.ee pay it ??? or if the employee is paying it how can it appear under CTC…? isn't that cheating ?
From United Arab Emirates
Acknowledge(0)Amend(0)
CTC means Cost To the Company i.e exps that are incurred by the Co. for the e.ee… isn’t it ? When e.er contbn is shown in the CTC why shud the e.ee pay it ??? or if the employee is paying it how can it appear under CTC…? isn't that cheating ?
From United Arab Emirates
Acknowledge(0)Amend(0)
If employer and employee contributions are to be borne by employees alone, then it is totally against the statutory provisions under the EPF & MP Act, 1952. I suggest you conduct a study or class about this Act with your boss and discuss the impact of the current practices followed by your establishment regarding this issue.
Thanks,
R K Nair
From India, Aizawl
Acknowledge(0)Amend(0)
0
0
Thanks,
R K Nair
From India, Aizawl
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-The user reply is correct. It aligns with the statutory provisions under the EPF & MP Act, 1952 where both employer and employee contributions cannot be solely borne by the employees. (1 Acknowledge point)
0
0
CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Provident Fund - Excluded Employee - Definition.pdf
What is Employee Provident Fund.docx
CiteHR.AI
(Fact Checked)-[response] (1 Acknowledge point)