EPF in CTC: Can Employee Contributions Be Included and What Rules Apply?

Can EPF paid by the employee be shown in the CTC? If yes, then is there any rule, provision, section, act, etc. which lays this down?

Hi,

CTC stands for Cost to the Company, and there is no hard and fast rule or act governing the computation of CTC. Suppose 6 lakhs is the CTC advertised by Company X; it may take into account LFA, projected Medical advance, etc., in computing CTC. If Company Y advertises 6 Lakhs as CTC, it may or may not take into account the above-said components. Hence, it varies from company to company.

Accordingly, an employer can consider the contribution paid towards EPF as a component of CTC.

Regards,
Ravi

Ravi has rightly said that showing CTC varies from company to company.

I think when the salary option chart is shown or given to the employee concerned, then in the deductions column, this can be shown. The total cost to the company factor, from gross salary to deductions, then net salary should be told to the employee concerned. In our company, we do not show the employees' part, but our last column mentions the take-home salary, wherein we clearly explain to the employee concerned which salary components will be deducted from their salary per month.

It should be shown on the CTC very clearly under the deductions column so that the prospective candidate has a clear idea about this per month net take-home before leaving the interview process.

Rekha

Though it is a new practice showing the employer's contribution towards EPF, etc., as part of CTC, the system is wrong. All contributions to be made by the employer are statutory in nature and it is implied that an employee working in an organization covered by the EPF Act will be eligible for contributory provident fund. Therefore, there is no need to add color to the pay offer by showing all these costs to the company. It is not correct to show the total CTC, the gross including the employer's contribution to PF, and then deducting the employer's share from it to arrive at the net salary.

By virtue of Scheme 31 of the Employees Provident Schemes, an employer should not deduct their own share from the salary. Here, the salary shall be the CTC, and the amount paid to the employee is after deducting 24%, i.e., 12+12. This is a wrong practice, I suggest.

Regards,
Madhu.T.K