Understanding Gross Salary: Does It Include Employer's PF and ESI Contributions?

Does the gross salary normally include the employer's contribution to PF (12%) and the employer's contribution to ESI (4.75%) scheme?

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Hi there!

Yes, the gross salary typically includes both the employer's contribution to the Provident Fund (12%) and the employer's contribution to the Employee State Insurance (4.75%) scheme. These contributions are part of the overall compensation package provided by the employer to the employee. If you have any further questions or need more information, feel free to ask!

The gross salary includes the employee's contribution to PF but excludes the ESI portion of it.

Thank you!

Hi Ajay,

If I have understood correctly, the gross salary of an employee includes PF and ESI shares of the employee as well. For example, if my gross salary is 8000, the breakdown would be as follows:
- Basic Pay: 3600.00
- HRA: 1800.00
- Food Allowance: 450.00
- Conveyance: 800.00
- Medical Reimbursement: 1250.00
- Books & Periodicals: 100.00

Therefore, the gross salary would be equal to the net salary plus the PF amount deducted and ESI amount deducted. Other deductions may also be considered based on the company's policy.

8000 = 7428 + (432 + 140)

I hope I have made myself clear.

Regards,
Sashmita

Hi,

I think the question has been a little misinterpreted. The question was about the employer's contribution and not the employee's. In my opinion, it is company-specific. Our company includes both employee and employer contributions as a part of the gross salary. Some organizations keep it out. There is no thumb rule for the same, in my opinion.

Regards,
Avneet

The gross salary includes both PF and ESI contributions of the employer by definition and practice.

Rahul Kumar

Hi Rahul,

We do not include ESI as a part of the CTC offered, and we also term it as Gross Salary. Although I agree that by definition, it should include both, the dimensions of this definition could be company-specific.

Regards,
Avneet

Hi,

Gross salary doesn't include PF and ESI employer contributions. For CTC calculation, PF and ESI employer contributions are included.

Thanks,
Vaitheeswaran

It is illegal to deduct an employer's part of the contribution to PF & ESI from the gross salary. If this is happening in your company, then you may be in big trouble.

Regards,
Abhi

I think you have misinterpreted it. You are doing an illegal thing only if you are deducting more than 12% of the basic+da component of the salary as PF. When one says your salary will be 240,000 per annum, it obviously means that this amount includes basic+da+hra+pf. Instead of paying the PF to the employee, it gets deposited with the PF authorities, which he will get after he retires. That's all.