Confused About Salary Deductions? Help Me Understand My Paycheck Breakdown

Hello, can anyone help! Below is the monthly salary breakup that I have received with the appointment letter. There is a differential amount of Rs. 1211.58/- between Total CTC [Rs. 19499.58/-] and Gross Salary [Rs. 18288.00/-] deducted from Total CTC. Kindly explain the deduction made? Also, please provide the calculation of income tax deduction.

Salary Break-Up:

- Basic - 7800.00
- Conveyance Allowance - 800.00
- HRA - 3900.00
- Medical Allowance - 1250.00
- Special Allowance - 4246.00
- Bonus Monthly - 292.00
- EDLIADMINChargesCM - 0.78
- ESLIChargesCM - 39.00
- EPFER - 936.00
- InsuranceCM - 150.00
- PFAdminCharges - 85.80

Total CTC = 19499.58
Gross Salary = 18288.00

PF - 936.00

Net Salary = 17352.00

*Income Tax and Professional Tax, as applicable, will be deducted. All taxes will be deducted according to the law.

Thanks in advance.

Regards,
Harshali.

Hi Harshali, The deduction of ₹1211.58 from your salary has been clearly mentioned - it is the employer's contribution towards the provident fund (sum of EDLIADMIN, ESLICharges, EPFER, Insurance, and PF Admin charges). It is part of the CTC but not part of the salary. So effectively, it is not a deduction from your CTC but an addition to your gross salary .

As for the TDS, it is not applicable to you, at least not in this particular pay month because there is no mention of the same in your payslip. If your net salary is about ₹17,000/- each month, there will be no TDS applicable to you in the current financial year.

Regards, Gaurang

Hello Gaurang,

Thank you.

My take-home salary (net salary) is Rs. 17,352.00, and the PF amount of Rs. 936.00 is deducted from the Gross Salary [Rs. 18,288 (GS) - Rs. 936 (PF) = Rs. 17,352 (NS)].

The differential amount is Rs. 1,211.58/- [Rs. 19,499.58 (T.CTC) - Rs. 18,288.00 (GS) = Rs. 1,211.58 (DIFF.)].

If I resign from the company, will the deducted amount of Rs. 1,211.58 [monthly] be returned?

Regards,
Harshali K.

Dear Harshali, you are right about your take-home salary being Rs. 17,352. Let me explain in some more detail.

Understanding Salary Components

There are three main totals when it comes to salary: Net Salary or take-home salary, gross salary, and CTC. Among these, CTC stands for Cost to Company and includes every expense that the company incurs for you, be it salary, provident fund, bonus, food, travel, telephone, etc.

Breakdown of Differential Amount

Coming to the differential amount of Rs. 1,211.58, it is a combination of multiple heads. First is the employer's contribution to your PF, which, as you said, is Rs. 936. But there is the PF administrative charge, the group insurance that the employer is providing you (Rs. 150), the EDLI (Employees' Deposit Linked Insurance), and its charges.

So effectively, it is not a deduction from your CTC. Rather, it is an addition from the employer to your gross salary, which is how your CTC is arrived at.

Resignation and PF Retrieval

If you resign from the company, you will be getting back your PF amount (employee and employer contribution plus interest) from the PF office. The other costs, insurance, and admin charges are not returnable.

I hope this clears all your doubts .

Regards,
Gaurang

Hello Gaurang,

Thanks once again. PF and PT are deducted from Gross Salary. I received the August '10 months salary of Rs. 17,152/- [deducted Rs. 936 (PF) and Rs. 200 (PT) from the gross salary (Rs. 18,288)].

Regards,
Harshali.

Just one correction to your above statement. TDS is applicable when a salaried male employee crosses the ₹1.60 lakh mark in the current FY. This might change to ₹2 lakhs when the DTC (Direct Tax Code) is implemented next year. So, at ₹18k, it will easily be subject to TDS provided the salary is consistent for a period of above 8 months. But, of course, subject to statutory deductions and claims under our very own complex Income Tax Rules!

Regards