Is It Fair for Employers to Deduct Provident Fund Contributions from Your CTC?

Hello everybody, I am Priyanka and living in Pune. I wanted to ask, can the Provident Fund (employer's contribution) be deducted from the CTC of the employee? Because I feel that if the company does that, in that case, an employee is paying twice for the Provident Fund from their own salary. Please suggest. Thanks.

Hi Priyanka,

CTC stands for Cost to Company. In this concept, the company includes P.F. contributions from both the employee and the employer, leading to no confusion. Nowadays, every company is adopting the CTC concept.

Previously, every company used to pay the employer contribution of P.F. from their own funds without affecting the employee's salary. However, in recent times, companies, to avoid the Employer P.F. contribution, simply deduct it from the employees' salaries in the name of CTC.

Regards,

Hi Priyanka,

Now many companies are using the CTC concept. The calculation is as follows:
CTC - 12% of basic (Employer part) = Gross Salary
Gross Salary - 12% of basic (Employee part)
The remaining 1.61% is to be paid by the employer.
You can convince the employee at the time of joining that the employer's part of PF is included in their CTC. For the employee, this results in a loss of 12%, but companies are using this concept, and they are not legally wrong.
In my company, we have provided PF facility to all, which means even for those whose basic is more than 6500/-. However, 6500/- is considered as the cutoff basic. This means if A has a basic of 10000/-, he will have to contribute 780/- (12% of 6500) as an employee and the same as the employer's part.

Please revert for any clarification.

Sanjeev
sanjeevcjos@gmail.com

CTC means Cost to Company, but PF is an employee contribution where the employer also contributes. The employer's contribution is an added benefit for the employee, and it also ensures the company's stability.