Understanding Salary Structure: Is Employee PF Part of Gross Salary and Should It Be Deducted?

Dear All, Good Morning, I have joined a new company and have reviewed the available appointment letters of the previous employees. The structure outlined in the old employee's appointment letter includes the following components:

- Basic
- HRA
- Conveyance
- Special Allowance
- Emp. PF
- Total

Queries regarding salary structure

I have a few queries regarding this structure:
1) Is Employee PF included in the gross salary?
2) What is the actual gross salary?
3) Should the Employee PF be deducted or not?

Employer contributions

In general, my practice is that the Employer PF and ESIC contributions should be covered by the employer. I would appreciate guidance on the above queries.

Regards, Prasad Apte [Phone Number Removed For Privacy-Reasons].

Employer's Contributions to EPF and ESI

Employer's contributions to EPF and ESI are not part of the gross salary but can be listed below the gross salary as part of the Cost To Company (CTC). From the gross salary, the employee's share of ESI and EPF shall be deducted to arrive at the net (take-home) salary.

Understanding PF Contribution and Gross Salary

PF contribution does not form part of Gross Salary because it is not an earning; it is a deduction made at a given rate from the Gross Salary calculated on "Pay" components of Gross Salary. However, it is considered in CTC because, in some industries, the employer also contributes an equal share of PF as deducted from the employee, whereas in some, PF is contributed by the employer with no deduction made from the employee. In some cases, part is deducted from the employee, and part is contributed by the employer.

Difference Between Gross Salary and Pay

"Gross Salary" and "Pay" are two different terms. Gross Salary includes Basic + Dearness Allowance (D.A.), HRA, and other allowances, if any. Whereas "Pay" includes only Basic Pay and D.A.

Regards,
AK Jain Retired Manager (HR) CPSU