Understanding PF Contributions: Is the Employer's Share Really Paid by You?

I wanted to know if the PF Employer Share is contributed by the employer or the employee. Some companies show both contributions from the employee. Is that correct or not?

Regards,
Jesmin

Most private companies offer compensation on a CTC basis, right? In this case, both contributions are part of the CTC, and it will not make any difference whether the Employee Contribution is different from the Employer Contribution. You can even find Gratuity as part of the CTC.

Hi Jesmin, If both contributions are deducted from the gross salary, then it is incorrect. Please double-check.

Thank you.

First, review the salary breakdown and then examine the employer's share, which should also be calculated based on the same basic amount as calculated for the employee. If this process is not followed, it may be incorrect.

Thank you.

Please refer to Para 31 of the EPF Scheme. It is as follows:

"Employer's Share Not to Be Deducted from the Members
Notwithstanding any contract to the contrary, the employer shall not be entitled to deduct the employer's contribution from the wage of a member or otherwise to recover it from him."

Thank you all for your helpful reply. If both contributions are deducted from our salary, what should I do? Do I have to inform my HR or file a complaint somewhere?

Hi, don't think directly about that. If both contributions are being deducted from the employee, then you should clarify this with your HR. Your concept will be clear.

Thank you.

Understanding the Difference Between "Gross" Salary and "CTC"

Please understand that there is a difference between "Gross" salary and "CTC." The gross salary is the salary that you earn, and PF is deducted from the basic component of the earned salary. The law prohibits the deduction of employer contributions from your salary. For example, suppose you have earned Rs 4000 as basic; then Rs 480 will be deducted from your salary, and the employer has to pay Rs 480. The employer cannot deduct Rs 960 from your salary.

What is CTC?

The CTC is the COST TO COMPANY and includes all the costs incurred by the company by hiring you. It will include your gross salary, PF payable by the employer, ESIC (employer component), bonus, gratuity, transport facility, etc. It will be clear that the company can include any components that they incur as costs in calculating your CTC. Hence, if the PF payable by the employer is shown in CTC, it will not violate any law.

Understanding CTC and Employer Contributions

CTC is a financial term—Cost to the Company—that means whatever expenses are incurred on an employee need to be included in the CTC. PF, Gratuity, and other estimated legal expenses should also be taken into account.

When negotiating, it is advisable to focus on the net take-home salary or gross salary to avoid confusion and ensure a clear understanding of the best offer.

If you have accepted an offer based on CTC, the organization's PF contribution must also be considered. This is why legal action cannot be taken against the employer.

In addition to Suhas Khambe, I would also mention that CTC is a financial term. In this concept, only the employer share component should be considered, i.e., gross salary + EPF contribution (employer share with admin charges) + ESIC (employer share) or group insurance cost on a monthly basis + leave encashment on a monthly basis + gratuity share on a monthly basis + bonus or ex-gratia component on a monthly basis. Any other expenditure from the employer on the employees must be taken into consideration while calculating CTC.

Thanks & Regards,
Sumit Kumar Saxena