Can any Employer cut/remit the 24% amount of PF from Employee's CTC? - CiteHR
Aniket Pathak
Sr. Executive Hr
Labour Consultant
+2 Others

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Dear All, Can any Employer cut/remit the 24% amount of PF from Employee's CTC?
For an Example, In an Appointment letter the monthly CTC is 15,500/- RS. However in the offer letter the CTC is mentioned as below.
Basic: 12000
HRA: 2060
GROSS SALARY (A) : 14060
COMPANY'S PF Contri. 1440
TOTAL CTC(A+B)=C : 15500
Request you to Please help me with the same.
Thanks & Regards,

Yes ... CTC is cost to the company and yes employers contribution is the cost borne by the company so it is right.
The entire PF cannot be deducted from the employee.( Only his 12% will be deducted from his salary)
An employer is obligated by law to pay his part of the contribution.
As per Paras 31 of the Employees Provident Fund Scheme 1952 the Employer’s share not to be deducted from the members. (Attached).
A CTC of any employee is not related with PF contributions.
A CTC is the sum total of the below:The below is a generic description
• Fixed pay which includes his basic , DA, Conveyance etc
• Employers contribution to PF, Gratuity ,Supperannuation
• Variable Pay : Based on performance /target achievement
• Any Perquisite or Benefits

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Dear Shweta,
Thanks for the update.
For the above case, My employer has deducted the 24% amount of PF from my CTC i.e 12% from my side and 12% from Employer side.
During the Joining formalities I have signed the Offer letter and Appointment letter as per the given CTC. now I have resigned from that company after the tenure of 1.09 years. Can i claim to that amount which is deducted from my CTC? Request you to Please guide me with the Proper legal action.

Dear All,
There is always confusion about CTC and Monthly gross. CTC has no legal stands, rather it is company's internal matter to arrive at per employee actual cost. But monthly gross is your monthly salary. In this case the monthly gross is INR 14060/- and after deduction of employee's contribution to PF, PTAX & ESI if any , the employee will receive the net monthly salary.
But CTC is all related cost (vary from organization to organization) for any employee while in employment. In this case payslip should look like Earning side - Basic & HRA and Deduction side Employee contribution to PF, ESI, PTAX etc. obviously the net salary will be less than monthly gross which has no relation with monthly CTC.
Thanks & Regds,
S K Bandyopadhyay
USD HR Solutions,
+91 98310 81531

PF is not deducted on your CTC.
Your employer PF contribution is merely mentioned in your CTC letter.
PF rules are governed by government rules and not by CTC letter.
E.g some employers even show Gratuity in their CTC letter.
• So when an employee joins his offer letter shows gratuity. But if he leaves within a year, he resigns not gratuity as he has not completed 5 years. He does not get the gratuity irrespective of the fact it is mentioned in the CTC letter.
If your employer has contributed his part of the PF and complied with all statutory obligations.
, then you can withdraw PF as per the normal process subject to conditions. You do not require any legal action.
If it is not the case then you need to first find out exactly who paid how much contribution and then accordingly decide. Visit EPF website and see the PF passbook. You will get the details of PF deductions from your salary and also the contribution from your employer.
PF in principal is required to be transferred to the new company when a employee resign from the old company. To make PF withdrawal process stringent, the government introduced UAN where multiple PF can be tracked under a single UAN.
So if you are unemployed for more than two months or you are employed in a company where there is no PF(as per laws) then contact your company HR and initiate the PF withdrawal process.

Dear Shweta Nair,
I think you didn't understand the very question but you gave the answer . Anyways its not about deducting PF on CTC its about showing it as a cost to the company. employer is not deducting the employer's share of PF from employees gross salary but it is shown as cost borne by the company. please understand the question first.
Also, Employer's share of PF is shown in appointment letter as cost incurred which is right.

Dear Chirag,
No, there is nothing to claim. Also no need for legal action.

In simple language any thing above the Minimum Wages, company can show any allowances, perquisites etc. in your CTC.
Employer's contributions as regards to your ESI, PF, LWF, Gratuity, Leave, Bonus will not reflect in your salary slip. However, it will be shown in your appointment letter or in Annexure to your appointment letter.
Legally company will show only 12% PF deduction thru your salary and remaining 12% (employer's share) they will remit to PF authorities alongwith your monthly PF contribution.
Had your company paid you Basic salary of Rs.15,500/- from your joining date, you would have became excluded employee from PF Membership and there would not have any PF deduction from your salary and there was an option for you to deposit 24% amount in your own recurring account. But putting amount in PF account is always beneficial as you get interest on product days basis and is exempted under section 80C of Income Tax.
So look for better opportunity elsewhere at suitable time.

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