Is My Employer's PF Contribution Supposed to Come from My CTC? Seeking Clarity on Salary Deductions

Hello. My company did not use to provide a provident fund, but starting from April 2023, they have started. My salary has decreased by approximately $2500 (in hand). I can see they are deducting my share of PF from the payslip but can't see their contribution amount. The HR is telling me that the Employer's PF Share is included in my CTC. Is this correct? Can they deduct that amount from my CTC, or should they pay it from their pocket and not from my CTC? Please advise. Thanks.

Hi, Yes, the employer's share of PF will be directly credited to your PF Account. In the normal course, the employee's share of PF has to be separate from the fixed salary. However, now it has become a trend that most corporates follow the tactic of adding the Employer PF to CTC. From the employer's point of view, any expenses incurred per employee are added to their salary, which constitutes a cost to the company. Many companies add Employer ESI contribution and Gratuity premium to CTC.

Since these components are outside of CTC, technically speaking, the employer is right, provided that the gross earnings of the employee should not be less than the minimum wages.