Understanding PF and Pension Deductions: How Do They Affect Your Take-Home Pay?

Hello all, I wanted to know about the deduction of PF from CTC. Where does PF and Pension fund get collected? In the same account or different? What is the take-home pay for an employee after the deduction of PF? Is it after a total of 24% or 12%?

If someone could help me with an example of salary bifurcation and let me know what is received by an employee.

Hello Sharddha,

PF is deducted at 12% of the basic from the employee's gross salary, and 12% is paid by the employer (which is part of CTC). Now, the entire amount of 12% of the employee's contribution will go into the PF account, and from the employer's share, 3.67% will go into the PF account, and 8.33% will go into the pension account. If you need any further details, please provide your CTC breakup so that I can tell you what your net salary will be after all deductions.

Regards,
Manish

Dear members,

Understanding PF Deduction from CTC

The PF deduction depends on the gross payable salary considered by the employer. The CTC sheet is generally split into two parts:

1. Monthly Payable Salary
This includes all payable emoluments like Basic, DA, HRA, Allowances, Incentives, etc., from which only deductions are made like PF, ESI, PT, Absent days, advance, etc.

2. Gross Salary
This contains the employer's contributions towards PF, ESI, PT, Annual Bonus, etc.

When processing the salary, if the Monthly Payable Salary is considered, then the employer's PF contribution should not be deducted. However, if the Gross Salary is processed as per the second part, then the employer's PF Contribution can be deducted.

I would like to provide the proper breakup of your CTC and details of your monthly salary so that fellow members can give correct and desirable comments on it.