Struggling with Salary Revisions: How to Handle PF Impact on Annual CTC Hikes?

Hi, I have been working on some salary revisions in a company. Their existing CTC structure did not account for PF. I have created the structure such that, as per the company policy, the annual CTC has the following components: Basic, HRA, and Conveyance + Fixed benefits equal 75% of the total annual CTC, which also includes the PF contributions of both the employee and employer. The variable component is 25%.

I am now facing a challenge in revising salaries. When I hike the TCTC by a certain percentage with benefits remaining the same, the change in PF contribution due to dependency on the Basic component is changing the annual CTC figure. Since I have approval on the percentage hike in annual CTC, this change in CTC due to dependency on PF is changing the whole equation.

Please help me understand how this can be calculated, or if I should just define salary bands and associate PF contributions. Any inputs will be helpful. Thanks!

I have attached the Excel sheet to clarify my dilemma. Now the problem is seeking a hike on the "current annual CTC," let's say 10%. This leads to the "new annual CTC." However, once I start calculating the CTC components (benefits: since PF contribution has changed), the "new annual CTC" no longer reflects a 10% hike.

Request you to look at the sheet and let me know if you can think of a solution to this problem. How is salary calculated keeping PF contributions in mind and deciding on annual CTC figures?

Oops, I forgot to attach the document above. In the attached sheet, I am seeking approval for a salary hike based on the total current annual CTC. This should result in the new annual CTC. Once the new annual CTC is determined, I will calculate other components (25% variable, fixed benefits excluding PF, and the gross amount). However, as the PF contribution depends on the Basic salary, and the current Basic is different, the annual CTC amount will change. It will no longer be the amount I calculated after applying a 10% hike to the current annual CTC. Feel free to adjust the percentage of the hike as needed!

Thanks!

Please find attached.

There is an error while attaching a copy. For the past 7/8 years, I have been working on this salary part. As per my knowledge, I had created the structure with the company policy on monthly CTC as follows. Please check the details given below and copy the same to an Excel sheet.

Salary Structure Details

SNo. Name Service in months CTC Increase Total Basic HRA 50% Cony. 11% LTA (basic/12) Med (basic/12) Bonus Other Allow. Gross sal PF contribution CTC Increase % Employee and employer both PF Contribution P.Tax as per statutory Net Salary

1 XXXXXX 67 75000 10000 85000 34000 17000 3740 2833 2833 5667 14847 80920 4080 85000 13.3 8160 200 72560

2 YYYYYY 48 55000 7000 62000 24800 12400 2728 2067 2067 4133 10829 59024 2976 62000 12.7 5952 200 52872

It may be useful and easy with simple calculations.

Regards,
Chandra Sekhar.

Dear Mr. Chandra Sekhar, I am not able to understand. Could you please illustrate with an example calculation or attach the same in Excel?

Regards,
Shany