Confused About Employee PF Contribution: Is It Really Part of the CTC?

Dear All,

Recently, I joined a new IT company where one of my department heads argued with me regarding whether Employee PF contribution is a part of CTC or included in CTC. According to his opinion, if we deduct Employee PF contribution from their Gross salary and then pay this salary, it is included in CTC.

I am a little bit confused. Please help me with the same.

Regards,
Sharada

Consider the following examples:

Example 1
Basic + DA = 100 (Say Rs. 100/- is Minimum Wages as of 30 Nov 09). In the above case, the employer has to pay Rs. 24/- towards PF. (Employer contribution cannot be recovered from the employee.)

Example 2
Basic + DA = 300 (Rs. 300/- exceeds minimum wages). In this case, the employer can work out the CTC calculation as follows:
Basic + DA - 100
HRA - 50
Conveyance - 50
Spl. Allow - 88
PF - Employer Cont - 12
---------
300/-
---------

In the above CTC Structure, you are paying more than minimum wages. Hence, if the employer contribution is merged into CTC, that is not a contravention of the law.

Thanks,

Dear all,

I am sending the salary slip format of one of my friend's company.

Earnings | Deductions:
- Basic: 15,000 | PF: 1,560
- HRA: 7,500 | TDS: 1,000
- Convey: 800 | Food coupons: 1,000
- Medical allowance: 1,250
- Special allowance: 3,670
- PF: 780
- Food allowance: 1,000
- Gross Pay: 30,000 | Gross Deductions: 3,560
- Net Pay: Rs. 26,440/-

Please clarify whether this type of payslip structure is correct or incorrect. Kindly also provide guidance on the correct method for calculating the salary slip.

Thanks and regards,
Kathir

Hi,

Employee PF contribution is not a part of CTC. Only Employer contribution of PF is part of CTC.

MANOKAVIN