Why Is My PF Deduction So High Compared to Others? Seeking Clarity on Company Practices

Is there any hidden benefit that the company enjoys by deducting a higher PF from the employee's salary?

I have recently joined a new company, and my PF deduction is nearly double that of an ex-employee whose CTC was much more. To be precise, for my CTC of 15000, the PF deducted is nearly double that of the PF deducted from the salary of the other person whose CTC was 20000. This is despite the management promising me a salary structure where I could get the maximum amount as take-home pay, and the deductions would be minimum.

On discreet inquiries with the HR staff, they did not have the faintest clue as to what could be the reason behind this. But I did get to know that if they wanted, the management could withhold sending signed papers to the PF department to release the PF amount of the employee, and that they have done so in the past.

I thought once the PF was deducted and deposited with the PF department, no one could meddle with it, and that the employee had the sole right to it.

Can anyone explain this?

Thanking you all in advance.

Radha

Hi, Radha,

You need to see your Appointment letter for the breakup, if any. If your Basic salary is more than 6500.00 per month, then you have the option of not opting for PF. Secondly, in your CTC, the company contribution is included; then the deduction might be around 24% (12% each from employee and employer). The company does not have any benefit of deducting higher PF.

So, check your breakup of CTC. If you let me know the breakup, then I can explain it to you in detail.

Regards,
Harshad

Thanks for your prompt response.

Yes, the base for my CTC of 15000 is 7000, whereas other older employees whose salaries are in the range of 20000 and above, have a basic of just 4000.

What is puzzling is that another employee who joined along with me three months back and whose CTC is 14000 also has the same basic as mine, i.e., 7000. Obviously, the management has been up to something. As this is a small company and the management and HR are the same group of 2-3 people, it is very difficult to find out what actually is going on.

Therefore, I decided to post this query. Since posting this query, I have also been going through the archives of CiteHr and there seems to have been a number of queries regarding PF, especially where one employee of WIPRO has not been able to claim his PF even after five years of leaving the company.

As my company also asks for a one-year bond and in the past, due to low salary and bad management policies and work environment, a lot of techies have been compelled to break the bond. So, is this a new way of harassing the employees? As I mentioned in my earlier post, the management/HR promised to keep the salary structure such that I could get the maximum take-home with minimum deductions, and also I am a non-technical person.

Hi Radha,

It seems that you are working for a family-owned company where family members are handling all the affairs of the company. You should be very careful regarding your salary structure. It is essential to understand the breakup of your salary structure.

If you have any other queries, please write to me.

Enjoy,
Harshad

Hi Radha, Harshad,

There is a benefit for the employee if they keep the PF option. They earn interest, which is always more than 8% on a monthly basis. Plus, you tend to save some money 😄 Also, you get tax exemption under section 80C for PF, which is deducted from your salary. Hence, opting for PF is always beneficial.

Hope you would like this... But the only concern after reading the above communications is to please check if the PF amount deducted from your salary is deposited with the PF authorities/PF trust. 😕

Smiles,
Navroz

Hi there,

You may note that:

1. No one can prevent you from withdrawing your amount, irrespective of whether your employer signs the forms or not.
2. It is good for you as an equal amount will be deposited by the employer (if both contributions are not included in CTC).
3. The employer can keep pending the amount to be deposited until February, as returns are filed in April. So, if you leave after March, your employer must have deposited the amount in the PF account.
4. Employers keep depositing the pending amount to deny those who leave without fulfilling the obligations. However, as returns are filed in April, they pay for all pending amounts by March.

If any further details are needed, you can contact me.

Thanks

Thanks Navroz and Siva.

As I mentioned earlier, both the PF contributions (employee's as well as the employer's) are from my CTC. So the deduction is quite high and my take-home is relatively lower.

I do know that PF deposits are beneficial in the long run but my only doubt is (as I mentioned earlier) that - is there a way that an employer can create a situation wherein the employee finds it difficult to withdraw the money from the PF department. In that case, there is no point of having a PF contribution.

This, I am asking because:

1) I am under a 1-year bond here and things are not too good here with a lot of techies having broken the bond and gone elsewhere.

2) I also feel cheated because the figure which is now my CTC was actually quoted as my salary at the time of the interview, and I have been told that they have done the same with all employees - technical and non-technical. It is, therefore, natural for me to feel wary of my employers all the time.

3) What still puzzles me is why was my basic kept so high - a figure nearly double that of the older employees drawing much higher salaries than me????? This, despite having promised me maximum "take-home" and minimum deductions.

Radha

Hi,

I must suggest you to ask your organization about your PF number and check the same with the PF authority. For your information, the PF department has issued a social security number to its members. Once you get your PF number or social security number, then no one can hold or stop your contribution. Additionally, you can ask your employer to show you your contribution once every three months in Form 3A, which is maintained by every employer. Please do not forget to collect your salary slips duly signed by the employer.

For any other queries, you can contact me, Lokesh Sharma, at 09818882227.

Hi Radha,

I agree with Logesh. It is not mandatory for the employer to contribute 12% for those whose basic is more than Rs. 6500. The ceiling for employers is Rs. 780.00 only, whereas they can collect 12% of the basic from the employee with the employee's consent and deposit it.

You should definitely ask for your PF number. For your information, this should be quoted in your salary statement. Also, once a year, the employer should issue a slip to you showing the details of the PF amount deducted and deposited in the year. Hence, you have all the rights to ask for your contribution details. Also, note that sometimes the employer does not deposit the amount with the PF department and retains it. However, they will have to pay the PF department with a penalty. In any case, it is better to know the details of your contribution. You can ask for Form 3A. Also, keep your salary statements safe.

Hope I am clear. If you have any doubts, please let me know.

Priya Maran