Confused About Employer's EPF Contribution in CTC? Let's Clarify Together

Hello Sir/Madam,

There is some confusion in the CTC structure. As per my knowledge, the employer's contribution to EPF is 13.61% (12%+1.61%), and I am also using the same for CTC computation. However, somewhere I have seen the employer's contribution is 12% only in the CTC structure.

Kindly suggest which one is correct.

Regards,
HR

Hi,

PF is 12% from the Employee and 12+1.36% from the ER. So it's 13.36%. They are showing it as 12% since it's contributed to their account and 1.36% is contributed towards the admin charges, so they may exclude it.

13.61% is wrong.

Understanding CTC Components

CTC, or Cost to Company, which includes the total cost incurred on an employee with wage/salary and legal contributions by the employer, varies from organization to organization. Some organizations include components in CTC such as employer PF contribution, Employer ESI contribution, bonus, gratuity, as well as leave encashment and ESOP. It all depends on the company policy or the terms agreed upon during salary negotiation and employment consent.

In your case, you mentioned adding a 12% employer contribution, while another figure is 13.61%; now, it is 13.36% as CTC. Both are correct. Just ensure that Basic+DA is not less than the minimum wage or the minimum PF contributing wage.

Thanks,

Manish

Employee contribution: 12%
Employer contribution: 13.36%
For CTC calculation.