Is My Company's 10% Salary Deduction for Freshers Legal? Seeking Clarity on Policies and Regulations

In my company, they are deducting 10% from my salary. They say it's company policy for freshers to have 10% deducted for the first 12 months, with a refund to be given after this period. Is this practice in line with any regulations or laws? Can someone please clarify if this is valid or invalid? Any assistance in understanding this would be appreciated.

Kindly confirm whether your employer is issuing payslips to employees.

Regulations on Wage Deductions

The issue regarding deductions from wages is regulated under the Payment of Wages Act, 1936. I think such deductions, as referred to by you in this thread, are not allowed under the said Act. I hope you may go through the provisions of the Act and take up the matter with your employer if desired.

Regards

No. Deduction is applicable only if your salary is taxable for all taxable heads, and the calculation should be based on the Income Tax slab. Payment of Wages Act refrains from any such deduction. However, tactfully, they could show it as a retaining bonus in the CTC instead of deduction.

As rightly said by Mr. Harsh, please do let the forum know whether this is mentioned in your appointment letter or payslip. I have seen a few employers deducting 10% of the salary each month towards the employee's commitment for a period, i.e., 1 year, but they term it as ex gratia in the appointment letter and deduct it from the CTC.