Is My PF Deduction Coming from My Salary? Help Me Understand My Offer Letter Details

Clarification on PF Component in Salary

Hello All, Please clarify my doubt below. I have a PF component separately mentioned in my offer letter, but I feel that this amount is deducted from my salary component itself. How can I identify whether it is deducted from my salary component or not? I have given an example of package details as given below:

- Basic: 220,000
- FBP: 388,544
- Base Salary: 608,544
- PF (12%): 26,400
- Gratuity: 10,582
- Total Fixed Pay: 645,526

Since the PF component is shown separately here, how will the deduction be calculated? Please advise.

Regards,
Karthik

Clarification on CTC and Salary Components

Rs. 6,45,526 should be your CTC and not your salary. The term 'Total Fixed Pay' is incorrectly used.

The company has included its contribution part of PF & Gratuity as a component of your salary ('Total Fixed Pay'), which is incorrect. The employer's contribution to PF/ESI & Gratuity is the employer's liability and should not be deducted from the employee's salary.

Regards

Dear Karthik, CTC is calculated based on all the components related to your employment. I have interpreted your salary package as follows, to be reflected in the monthly payroll:

Salary Breakdown

Basic: 18,333 (Annual: 18,333.33 x 12 = 220,000)
FBP: 32,379 (Annual: 32,378.66 x 12 = 388,544)

Employer Contributions

Annual EPF - 12% on 220,000 = 26,400
Annual Gratuity - 4.81% on 220,000 = 10,582

Total CTC Calculation

Salary through Payroll -
Basic: 220,000 - A
FBP: 388,544 - B
Employer's Contributions -
EPF: 26,400 - C
Gratuity: 10,582 - D

CTC = A + B + C + D = 645,526

I hope this clarifies everything.

Regards,
S. Sethupathy
Excellent HR Services
Erode.

Dear All, Thanks for the details. Can you please brief me on the deductions? For example, can you provide me with a monthly salary breakdown? Are PF contributions supposed to be contributions from the employer, right? Does CTC mean that PF is a component part of my salary package and the company deducts it from my salary for PF? Does this mean they include this PF component as part of the employee's package and deduct it from the employee's salary itself? Is this the way every company handles it? I apologize for bothering you with these questions. Whenever I have worked, I have always asked for clarity but never received clear details. So, please answer the above.

Thanks & Regards,
Karthik

Dear Karthik,

Your contribution (Employee's) alone can be deducted from your salary. Your monthly payslip is as follows:

Earnings Columns:

- Basic: 18,334
- FBP: 32,379
Total Earnings: 50,713

Deductions Columns:

- PF: 2,200
Net Payable: 50,713 - 2,200 = 48,513 (here they can deduct TDS and Professional Tax as applicable)

Employer's Contribution towards PF and Gratuity are also due for you, but you can receive them upon your withdrawal eligibility, i.e., at the time of resignation.

Hope I made it clear...

Regards,
S. Sethupathy
Excellent HR Services
Erode

Understanding CTC (Cost to Company)

CTC is the acronym for Total Cost to the Company. It is the sum total of all the perquisites and fringe benefits that an employee receives from the company, including the salary.

The CTC is the sum of the gross salary, bonus, all types of contributions by the employer for the employee (PF/ESIC/Gratuity, etc.), and other perquisites and benefits. The CTC includes benefits such as fixed medical reimbursement, insurance benefits, travel allowance, telephone expenses, etc.