Can employer deduct PF admin charges from offered CTC salary?

Dear Members,

I have a query regarding PF deduction.

My friend is working in a startup MNC. His salary breakup is mentioned below:

Basic Salary - 15,998
HRA - 6,399
Conveyance Allowances - 1,600
Medical Allowances - 1,250
Special Allowances - 10,304
Total Gross Salary - 35,550
PF contribution by the employee - 1,800
Net Salary - 33,750

Employer PF contribution - 1,950
CTC - 37,500

In my understanding, employee and employer-side PF contribution rates are supposed to be 12%. However, they are deducting it by 13% (12% PF + 1% admin charges).

Is this the correct deduction or not? Please suggest.

Hi,

Lately, it has become common in the IT sector for employer contributions to PF to be included in the CTC of the employee. However, recovering admin charges from employees is not ethical.

Salary processed by many organizations from CTC. The employer's portion of EPF is a part of CTC. Then the employer can deduct. It is nothing but an addition to the earning side and then deduction.

However, the way the salary structure has been shown, it appears that the employer is wrongly deducting the admin charge, which is illegal.

Please check in detail and understand the situation properly.

S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity.

Hello,

We are discussing CTC (Cost to Company), which refers to the total salary package of an employee. It includes all monthly components such as basic pay, reimbursements, various allowances, and all annual components such as gratuity, annual variable pay, annual bonus, etc.

This is a legal entity, so don't be confused. If the employer has mentioned in the salary breakup 12% and 13%, then there's no problem.

I think all the pertaining salary components belong to employees. To my knowledge, it can be valid, but 1% is not PF admin charges. PF admin charges are 0.5%, and another 0.5% is for EDLI charges. This is according to the Act.

Thank you