Confused About PF, ESI, and Allowances? Need Help Understanding Deductions and Benefits

Respected to my seniors,

Sir/Ma'am, I have a few doubts which I request you to kindly help me out with as I am confused about the below-mentioned points:

1) PF Deduction

I wanted to know if somebody's basic salary is 50,000, then how much percentage of PF would be deducted? And up to how much amount of basic salary would PF be deducted? What is the advantage of the deduction of PF?

2) Calculation of ESI, DA, TA, HRA, LTA, and Allowances

How to calculate ESI, DA, TA, HRA, LTA, Conveyance Allowance, Overtime Allowance, and Entertainment Allowance? Will these be calculated with the basic salary, gross salary, or CTC? What are the advantages of the deduction of ESI and how will that benefit us in the future?

Sir/Ma'am, kindly let me know the advantages of DA, TA, HRA, and LTA as well.

Kindly help me out as I urgently need this information, for which I would be very grateful to you all. Please reply to all the above questions very soon.

Ajay, it would be best if you used one of the salary calculators in Excel that a few generous contributors have uploaded. They have the breakdown percentage of every component and the contribution margin as well, so you can learn from them.

It is apparent that you are totally confused. You are mixing up too many things. If your company is large and has established scales of pay, then they would have already fixed your salary and allowances. The basic salary, DA, HRA, LTA, Conveyance Allowance, Overtime Allowance, and Entertainment Allowance are fixed by the company at their discretion. If you are a workman and your factory comes under the Factories' Act, only then is the DA declared by the Government. Otherwise, even DA, whether to give to employees or not, is at the discretion of the company.

The contributions to EPF, ESI, and Professional Tax are to be paid to the Government at the rates fixed by the Government. If you are drawing a gross salary of more than Rs.15,000 pm, then you are out of the purview of ESI.

The total amount consisting of your Basic Salary, DA (if any), and all other allowances included, is known as your Gross Salary.

The amount net of all deductions towards EPF, ESI, Professional Tax, and Income Tax, if applicable, is known as your Net Salary or Take-Home Salary.

In addition to the Gross Salary, the company incurs other expenses on employees like free or subsidized refreshments, meals, transportation, employer's contribution towards EPF and ESI, medical facilities, if any, etc., and all these added up are known as CTC (Cost to the Company).

The percentages of contribution to EPF and ESI (both employees' and employer's) are available on thousands of webpages. Do a Google search.

Dear professionals, I need some information regarding PF. When does an employee become eligible for the pension scheme?

[QUOTE=Cameo;2196263]

Hello, I wanted to know:

1) Can a company deduct income tax, PF, ESI, or professional tax with very few employees?

2) How many direct and indirect employees are required for PF, ESI, PT, and income tax deduction?

3) What if a company has a higher number of trainees? Will there be PF, ESI, PT, and income tax deduction?

Looking forward to your response.

Regards,
Ajay
HR Executive

[QUOTE=talentsorcerer;2196066]

Hello, I wanted to know:

1) Income Tax, PF, ESI, and Professional Tax Deductions for Small Companies

- Can a company deduct income tax, PF, ESI, and professional tax with very few employees?

2) Employee Requirements for Deductions

- How many direct and indirect employees are required for PF, ESI, PT, and income tax deductions?

3) Impact of Trainees on Deductions

- What if a company has a higher number of trainees? Will there be PF, ESI, PT, and income tax deductions?

Looking forward to your response.

Regards,
Ajay
HR Executive