Balancing Salary Deductions: How Much Can Be Deducted Without Leaving Too Little?

Dear all, Suppose a person's gross salary is Rs. 8000/-. Now he has taken a loan, advance, etc. To recover this, I have to deduct some amount from his salary towards the loan and advance. Additionally, PF, ESI, PT have to be deducted, and he has to be paid some salary for the month worked. So, my question is:

Deduction Queries

a) How much to deduct? Because after deduction, very little is left over as his take-home salary.
b) Is there a minimum level after which one cannot deduct?

Again, not to forget that I cannot deduct the whole salary. Please help.

Statutory Deductions and Limits

It is compulsory to effect statutory deductions like P.F., ESI, Professional Tax, Labour Welfare Fund, and deductions towards co-op society, etc., as a first priority. In terms of the Payment of Wages Act 1936, the deductions shall not exceed 50% of the wages. If co-op society deductions are included, they shall not exceed 75% of the wages.

Regards,
B. Saikumar
Mumbai

Professional Tax Deduction

Professional Tax (PT) is always to be deducted from the gross salary earned, not from the net salary. This means that after calculating a person's salary based on their attendance in a month, the gross earned salary is determined, and PT is to be deducted from that amount.

I hope the statement above is clear.

Regards,
Murali

Dear Sinha, greetings. The statutory deductions have to be made from the gross salary, and then out of the balance, deductions towards loans and advances, etc., can be made. The net salary should not fall below 40 percent, including all deductions. Hope you are now clear.

With regards,
Ramanathan
Advocate and Labour Law Consultant

The Payment of Wages Act has provided important guidelines for salary deductions, including statutory, general, etc. It is advisable to refer to the Payment of Wages Act for detailed information on deductions, especially concerning detailed deductions.

Dear All, I need clarity on how much advance deduction can be made from a worker's monthly salary. Suppose their gross monthly salary is Rs. 10,474, PF deduction is Rs. 1,257, and Employee ESI deduction is Rs. 79. Can they be eligible for a deduction of an advance amount of Rs. 4,000, including all statutory deductions such as PF & ESIC?

Provision for Deduction as per the Act

What is the provision for deduction as per the act in the above cases? The worker has given consent for deductions from their monthly salary.

The deduction shall not be more than 50% of the salary for all employees.

Dear All,

I need clarity on how much advance deduction can be made from a worker's monthly salary. Suppose his gross monthly salary is Rs. 10,474, with a PF deduction of Rs. 1,257 and an Employee ESI deduction of Rs. 79. Is he eligible for an advance deduction of Rs. 4,000, including all statutory deductions like PF and ESIC?

Provision of Deduction as per the Act

What does the act state in the Payment of Wages Act, and what is the calculation in the above case? The worker has given consent for the deduction from his monthly salary.

From the gross salary of Rs. 10,474, the permissible deduction is Rs. 5,237 as per the Payment of Wages Act 1936. So after deducting PF & ESI, only Rs. 3,901 can be deducted for all other purposes.