Understanding PF Admin Charges: Why Aren't They in Employee CTC and How to Account for Them?

Dear friends,

We are deducting PF contributions at 12% from the employee's side, and the employer also contributes 12% along with an additional admin charge of 1.61%.

Questions Regarding PF Admin Charge

1. How do we deduct the PF admin charge, and is it done monthly or yearly?
2. Why is the PF admin charge not shown in the employee's CTC structure under PF contributions?
3. I have reviewed several employee offer letters and CTC calculation Excel sheets, but none of them mention the employer's PF admin charge contribution.
4. Where should we account for the employer's contribution towards the admin charge in the CTC?
5. Why is this discrepancy present?

Kindly explain to me.

Regards,
Jayabalan.k

Dear Sen sir, As the question is mentioned above, in the PF section, the employee's part is 12%, whereas the employer's part is 12% + 1.61%. However, in the CTC, we only show 12% of the employer's part. How do we adjust the 1.61% in the salary as it is also a cost to the company? Where do we have to show this 1.61%, and how do we reach a solution?

Regards

You will mention in CTC the employee contribution as 12% and the employer contribution as 13.61%. If ESIC is applicable, then the employee contribution will be 1.75% and the employer contribution will be 4.75%. I believe you understand that.

Regards,

Employee - 12% (Basic, Dearness Allowance, Food concessions, and other allowances)
Employer - 13.61%

Contribution:
• 3.67% - Provident Fund (A/c No.1)
• 8.33% - Pension Fund (A/c No.10)
• 0.5% - Employee Direct Linked Insurance Scheme (EDLIS), (A/c No.21)

Administrative Charges:
• 1.10% of Emoluments - PF Contribution
• 0.01% of Emoluments - EDLIS

Regards.