Understanding PF Deductions: Is It the Employer's or Employee's Contribution on Your Salary Slip?

Hi,

My name is Rachel, and I am a newly-appointed HR Executive in my company. I would like to clarify one detail - which is the PF that is shown as a deduction in an employee's salary slip? Is it the employer's contribution (12% of basic), the employee's contribution, or both? Also, if the amount is the employer's contribution, where is the employee's contribution shown?

Thanks & best regards.

The amount shown as a deduction in the salary slip is the employee's contribution. The employer's contribution is added to the PF balance shown in the PF statement or PF card issued to the employees.

Hope this is of help to you.

Thanks & Regards, Avika Kapoor

Hi Avika & White Eagle,

Thanks for your reply. One more clarification - suppose a candidate's CTC includes PF (at 12% of basic). Is this PF the employee's or employer's contribution? Does this mean that the PF in the CTC is just the company's way of giving less in hand and putting 12% of the basic into Voluntary PF?

Hi Rachel,

The employee PF contribution is shown in the salary slip as 12% of the basic salary, while the employer PF contribution is shown in the Cost to Company (CTC) as 12% of the basic salary. Within this 12%, 3.67% goes to the Provident Fund and 8.33% goes to the Pension Fund, making the total contribution 12%. These percentages are fixed by the government, and employers are required to pay the contribution.

I hope this clarifies things for you.

The 12% PF shown in CTC is the employer's contribution, please. It is a way of interpretation that this means paying less salary, but if you look at it, it is a way of helping you save for the future. Hope this clarifies your doubt.

Thanks & Regards, Avika

Hi Avika,

What is the percentage that an employee can contribute if he wants to contribute more than 12% of his basic?

Regards,
Ankur Jain

Dear Ankur,

If an employee wants to increase their share in PF, they can do so. The PF Act is not clear on the maximum limit, but PF authorities accept a 12% statutory contribution and a 12% voluntary contribution from the employee; they do not accept any in-between formula. According to the Payment of Wages Act, the total deduction cannot exceed 50% of the employee's salary, including all components.

It is advisable to take a written application from the employee requesting an increase in their contribution to PF, clearly stating the desired amount. The company's limit is fixed.

For more HR-related information, you can visit: [White Eagle: PF Query](http://kuldeeprathore.blogspot.com/2009/08/pf-query.html)