Confused About My Salary Deductions: Can Someone Help Me Understand the Breakdown?

Understanding My Salary and Deductions

My CTC is ₹5,24,000 (₹52,000 Monthly).

Total Days: 31.00 (October)
LOP (Loss of Pay): 0.50
Work Days: 31.00
Effective Work Days: 30.50

These calculations are based on 30.5 days. I am contributing a minimum PF of 12%, which is ₹1,800, up from ₹780 previously. The 30.5 days' salary is ₹51,161, and 40% of the basic is ₹20,465. I assume that both my employer and I are contributing ₹1,800 monthly (12% of ₹15,000), totaling ₹3,600. However, there still seems to be some unclear amount deducted.

20465 + 10232 + 787 + 10478 + 7010 = 48972
48972 - 51161 = 2189
2189 - Employer PF contribution 1800 = 389

Why has this extra money been deducted?

Breakdown of Salary Components

[BASIC: ₹20,465.00]
HRA: ₹10,232.00
CONVEYANCE: ₹787.00
TAXABLE FBP: ₹10,478.00
OTHER ALLOWANCE: ₹7,010.00

Deductions

LABOUR WELFARE FUND: ₹10.00
PF: ₹1,771.00

Total Earnings: ₹48,972.00
Total Deductions: ₹1,781.00
Net Pay: ₹47,191.00

I want to understand the calculation of my employer's contribution to PF and how other allowances are calculated. I thought the amount left after basic, HRA, conveyance, and FBP is considered as Other Allowance.

Regards,
[Username]

Your CTC is Rs. 52,000. You cannot get the exact net salary by simply calculating (Rs. 52,000/31 * 30.5 = Rs. 51,161) - this is not the correct method. Is 40% of the Basic pay - Rs. 20,465 fixed or calculated based on attendance?

Please compute all your fixed components according to your attendance:

Fixed Basic / 31 * 30.5
Fixed HRA / 31 * 30.5
Fixed Conveyance / 31 * 30.5
Fixed Tax FBP / 31 * 30.5
Fixed Other Allowances / 31 * 30.5

Deductions:
- Lab Fund
- PF (it should be Rs. 1,800 and not Rs. 1,771 since your Basic is above Rs. 15,000) - please verify this with the accounting department.

Gross - Total of calculated Basic, HRA, Conveyance, Tax FBP, and other allowances.
Deductions - PF and Lab Fund.
Net Pay - Gross - Deductions.

Regards,
Sanjukta

Thanks for your reply, Sanjukta. All the figures I have mentioned are according to my pay stub and calculated as per 30.5 days. I have mentioned them as they are.

520000/31 = 1677.41 (Salary of 1 day). My loss of pay is 0.50. Total number of days present: 30.5 * 1677.41 = 51161.00. The reason for confusion is that some figures, such as the employer's contribution to PF, are not mentioned in my salary.

Earnings and Deductions

BASIC: 20465.00 (for 30.5 days)
PF: 1771.00
LABOUR WELFARE FUND: 10.00
HRA: 10232.00 (50% of Basic)
CONVEYANCE: 787.00 (for 30.5 days out of 800)
TAXABLE FBP: 10478.00 (for 30.5 days out of 10650)
OTHER ALLOWANCE: 7010.00 (for 30.5 days out of 7125)

(Confusion) How is this amount calculated?

Total Earnings: Rs. 48972.00
Total Deductions: Rs. 1781.00

Except for all these figures, nothing else has been mentioned.

Thanks for your reply, Sanjukta. All the figures I have mentioned are according to my pay stub and calculated based on 30.5 days. I have mentioned them as they are.

520000/31 = 1677.41 (Salary for 1 day)

My loss of pay is 0.50. Total number of days present: 30.5 * 1677.41 = 51161.00.

The reason for confusion is that some figures, such as employers' contributions like PF, are not mentioned in my salary details.

Earnings and Deductions

BASIC: 20465.00 (for 30.5 days)
PF: 1771.00

HRA: 10232.00 (50% of Basic)
LABOUR WELFARE FUND: 10.00

CONVEYANCE: 787.00 (for 30.5 days out of 800)

TAXABLE FBP: 10478.00 (for 30.5 days out of 10650)

OTHER ALLOWANCE: 7010.00 (for 30.5 days out of 7125) (Confusion: how is this amount calculated?)

Total Earnings: Rs. 48972.00
Total Deductions: Rs. 1781.00

Take Home: 47191.00

Except for these figures, nothing else has been mentioned. I contribute 400 for medical (not mentioned in the slip) and employers' PF contribution (not mentioned).

My Questions

1) How much is my employer's contribution (as it is not mentioned in the payslip) in PF: 1800 or 1171 (same as my share in PF)?

2) What other items are included in other allowances and how are they calculated?

3) Is there a possibility that my employer is still contributing 780 even after reaching the ceiling limit of 15000?

My Answers

1) How much is my employer's contribution (as it is not mentioned in the payslip) in PF? Is it 1800 or 1171 (same as my share in PF)?

For more details on this, please check this site: http://Basics of Employee Provident ...ney Aware Blog. And did you get the amount - 1171?

2) What other things are included in "Other Allowance" and how is it calculated?

The fixed Other Allowance is 7125, (7125/31*30.5 = 7010).

3) Is there any possibility that my employer is still contributing 780 even after the ceiling limit of 15000?

Of course, if the employer is deducting from you, then the employer is also contributing the same to your PF account. Employers' PF contribution amount is never shown on a payslip. You can ask for the PF statement from the company; usually, the company provides it to the employee after every quarter, but only once they receive acknowledgment from the government.

You must know about your PF account; if not, it is mentioned on the salary slip, or you can ask from the accounts/admin departments. You can also check your PF account online.

Medical Contributions

The amount of 400, I assume, is because the company has a contract with an outside medical insurance company. In that case, if it is paid from your salary, then it can be shown on the salary slip under deductions.

Hope this has cleared your doubts.

Regards, Sanjukta

Clarification on PF Calculation and Pro-rata Effect

For doubt 1 regarding PF:

1. As PF is capped at Rs. 1800, the effect of 0.5 absent days is calculated on Rs. 1800 and not on the Basic salary of Rs. 20,465. This method is followed to provide a pro-rata effect (calculating actual based on attendance) uniformly on all earnings and deductions.

2. The pro-rata effect applied to all employees should be uniform. If an employee's Basic salary is Rs. 10,000 and the employee is absent for 0.5 days, the calculations would be: Basic - Rs. 9,839, PF - Rs. 1,181. There must be identical treatment for 0.5 absenteeism for employees with a Basic salary of more than Rs. 15,000, with PF capped at Rs. 1800.

3. If an employee joins on the 15th of a month with a Basic salary of Rs. 30,000, the Basic paid will be Rs. 15,000 and PF should be Rs. 900 (not Rs. 1800). This scenario also applies if an employee is separated on the 15th of a month.

Salary Calculation with Loss of Pay (LOP)

After a few calculations, I obtained the exact figures. The confusion was caused by amounts not shown in the salary slip.

To calculate with LOP, here is a simple formula: (Amount X Number of days employee present divided by total number of days). For example, 20800 x 30.5 / 31 (Here the month consists of 31 days and LOP is 0.5) = 20464.51, rounded off to 20465.00. Alternatively, 52000 x 30.5 / 31 = 51161.29 x 40% basic = 20464.51 (rounded to 20465).

Salary Calculation with Zero Loss of Pay

Gross: 52000.00
BASIC: 20800.00
PF: 1800
HRA: 10400.00
Labour Welfare Fund: 10.00
CONVEYANCE: 1600.00 (Revised in 2015, previously 800)
TAXABLE FBP: 10650.00
OTHER ALLOWANCE: 5825.00

These are the figures not mentioned in the salary slip:
Employer PF Contribution: 1800.00
Medical: 425.00
Parental Insurance: 500.00
Other allowance: 20800 + 1400 + 1600 + 10650 - 52000.00 = 8550
8550 - 1800 + 425 + 500 = 5825

Thanks,
Rahul