Dear All,
I have noticed that some MNC companies in Bangalore include the Employer contribution to PF as part of Gross salary. To the best of my knowledge, this practice is not permissible. Could you please advise on how these large corporations are able to do this?
Regards,
Praveen
From India
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14I have noticed that some MNC companies in Bangalore include the Employer contribution to PF as part of Gross salary. To the best of my knowledge, this practice is not permissible. Could you please advise on how these large corporations are able to do this?
Regards,
Praveen
From India
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Dear Sender Emp.contribution of PF is shown as part of CTC in many mnc. which need to be discussed at the time of CTC negotiation. With regards L.Kumar
From India, Madras
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From India, Madras
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I have gone througjh many discussions all mention that PF employer contribution is not part of gross. How can companies mention in salary slip as part of gross?
From India
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From India
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Kumar, My point of discussion is that employer contribution of CTC is mentioned as Gross not CTC and it is shown in salary slip. How is this possible?
From India
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From India
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A typical salary slip says earnings and decductions Do they show this as earnings and then deduct?? I think if we can have a look at the slip, then we can comment Siva
From India, Chennai
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From India, Chennai
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Dear Praveen,
Yes, actually CTC means the total cost which an employer spends on an employee, directly or indirectly. It includes the PF contribution from the employer's side as well. If it's been added to your gross salary, then it must be discussed prior. You must have been asked about your take-home salary. If it is the same, then they may have that kind of structure following with them.
Regards,
Amit Seth
From India, Ahmadabad
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Yes, actually CTC means the total cost which an employer spends on an employee, directly or indirectly. It includes the PF contribution from the employer's side as well. If it's been added to your gross salary, then it must be discussed prior. You must have been asked about your take-home salary. If it is the same, then they may have that kind of structure following with them.
Regards,
Amit Seth
From India, Ahmadabad
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Siva, That is exactly what we are saying the company is adding the Employer contribution of PF in Gross and then showing it as deductions. This is not legal. Your comment please.
From India
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From India
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Amit,
My posting refers to GROSS Salary. In the gross salary of the payslip, the company has added the Employer contribution of PF and then again shown the same as a deduction in the next column. This, as far as my knowledge goes, is not fair. How is it that big companies do this and get away with it?
From India
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My posting refers to GROSS Salary. In the gross salary of the payslip, the company has added the Employer contribution of PF and then again shown the same as a deduction in the next column. This, as far as my knowledge goes, is not fair. How is it that big companies do this and get away with it?
From India
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To the best of my knowledge, an employer's contribution to PF is to be shown in the CTC, and not in the Gross.
I agree with Praveen that there appears to be something strange. I also agree with others commenting that if a copy of the payslip can be posted, we may be better able to understand the logic used.
Jeroo
From India, Mumbai
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I agree with Praveen that there appears to be something strange. I also agree with others commenting that if a copy of the payslip can be posted, we may be better able to understand the logic used.
Jeroo
From India, Mumbai
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PF contribution of the employer should be part of CTC and not part of Gross salary. Gross salary is that part of the salary that is paid on a monthly basis to the employee. Hence, if the employer is adding the Employer contribution of PF in the payslip, this is definitely not normal. However, there is no legal definition for Gross salary for the purpose of issuing a payslip. Hence, there may not be sufficient legal ground to find a platform for discussion with the MNC. Nevertheless, the company rules are an indication of such definitions, and obviously, the company rules would probably include this as part of Gross salary.
From India, Hyderabad
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From India, Hyderabad
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Jeroo, I will try to get the salary slip without the company details to be posted here. I will do it tomorrow.
From India
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From India
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Dear All,
The actual salary slip cannot be posted due to company confidentiality; hence, I am posting the salary slip details here.
First Column:
- Basic: XXXXX
- HRA: XXXX
- Conveyance: 800
- Medical: 1250
- Flexi benefit plan: XXXXX
- PF employer contribution: 2268
- Total: XXXXX
Second Column:
- PF: 2268
- PF employer contribution: 2268
- PT: 200
- Income Tax: XXXX
- Other deductions: XXX
- Gross deductions: XXXX
- Net pay: XXXXX
Hope this will help you.
Regards,
Praveen
From India
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The actual salary slip cannot be posted due to company confidentiality; hence, I am posting the salary slip details here.
First Column:
- Basic: XXXXX
- HRA: XXXX
- Conveyance: 800
- Medical: 1250
- Flexi benefit plan: XXXXX
- PF employer contribution: 2268
- Total: XXXXX
Second Column:
- PF: 2268
- PF employer contribution: 2268
- PT: 200
- Income Tax: XXXX
- Other deductions: XXX
- Gross deductions: XXXX
- Net pay: XXXXX
Hope this will help you.
Regards,
Praveen
From India
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Employer contribution to PF is not a part of the monthly gross salary; however, it can be added to the annual component while preparing CTC since it is a cost that is incurred by the company towards its employees.
Regards,
Asitosh Sharma
From India, Pune
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Regards,
Asitosh Sharma
From India, Pune
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Dear Praveen,
Employer contribution of PF cannot be a part of your GROSS SALARY. It can only be considered as part of your CTC. Please remember that PF deduction for workers earning 6500+ basic is voluntary. You might have agreed to this deduction at the time of joining and thus they are deducting it from your salary. However, the employer's share of PF can never be a part of Gross Salary. If the above is applicable, they should have shown it differently rather than including it as a part of Gross Salary.
Thank you,
Sweety Singh
From India, Delhi
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Employer contribution of PF cannot be a part of your GROSS SALARY. It can only be considered as part of your CTC. Please remember that PF deduction for workers earning 6500+ basic is voluntary. You might have agreed to this deduction at the time of joining and thus they are deducting it from your salary. However, the employer's share of PF can never be a part of Gross Salary. If the above is applicable, they should have shown it differently rather than including it as a part of Gross Salary.
Thank you,
Sweety Singh
From India, Delhi
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I went through the contents on ESI topic and still have a doubt on it. So, perhaps someone can assist me on that front.
For ESI to be applicable, should the company have at least 20 persons and more drawing a salary of Rs 10,000/- per month (gross)? OR For ESI to be applicable, the company should have a strength of 20 persons and more with a few employees drawing Rs 10,000/- per month (gross).
In my company, we have a total of 20 persons in various salary ranges. So, will EPF be applicable to us or ESI? I am mightily confused on this front.
From India, Delhi
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For ESI to be applicable, should the company have at least 20 persons and more drawing a salary of Rs 10,000/- per month (gross)? OR For ESI to be applicable, the company should have a strength of 20 persons and more with a few employees drawing Rs 10,000/- per month (gross).
In my company, we have a total of 20 persons in various salary ranges. So, will EPF be applicable to us or ESI? I am mightily confused on this front.
From India, Delhi
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Dear Praveen,
In all the MNC companies, normally I have seen the CTC is always inclusive of Employee PF + Employers PF as both the components are a cost to the company. That is why we have to be very careful while negotiating the package. :)
Regards,
Sonia.
From India, Mumbai
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In all the MNC companies, normally I have seen the CTC is always inclusive of Employee PF + Employers PF as both the components are a cost to the company. That is why we have to be very careful while negotiating the package. :)
Regards,
Sonia.
From India, Mumbai
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Dear All,
CTC stands for the total cost to the company. There are three parts in the salary structure:
1. Net salary, which is your take-home salary after all deductions.
2. Gross Salary
3. CTC
From the gross salary of the employees, PF contribution is deducted, and that needs to be discussed at the time of the interview. It is always advisable to ask for your take-home salary after all deductions.
The CTC component may include everything, including LTA, medical reimbursement, medical insurance, canteen, mobiles, petrol, uniform, etc.
Regards
From India, Delhi
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CTC stands for the total cost to the company. There are three parts in the salary structure:
1. Net salary, which is your take-home salary after all deductions.
2. Gross Salary
3. CTC
From the gross salary of the employees, PF contribution is deducted, and that needs to be discussed at the time of the interview. It is always advisable to ask for your take-home salary after all deductions.
The CTC component may include everything, including LTA, medical reimbursement, medical insurance, canteen, mobiles, petrol, uniform, etc.
Regards
From India, Delhi
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Thank you, Mr. Akhil... :D
Dear New Entrant,
The formality for ESI is that you must have a minimum of 20 employees, regardless of whether they are earning a salary of more than Rs. 10,000 or less. The maximum ceiling for ESI contribution is up to Rs. 10,000 Gross/Month only. Those earning Rs. 10,001 or more will be exempted from ESI.
I hope this clarifies things for you.
Regards,
Amit Seth.
From India, Ahmadabad
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Dear New Entrant,
The formality for ESI is that you must have a minimum of 20 employees, regardless of whether they are earning a salary of more than Rs. 10,000 or less. The maximum ceiling for ESI contribution is up to Rs. 10,000 Gross/Month only. Those earning Rs. 10,001 or more will be exempted from ESI.
I hope this clarifies things for you.
Regards,
Amit Seth.
From India, Ahmadabad
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Thank you, Amit,
It has cleared my doubt. I have another query. The company has just completed 1 year and has a current strength of 20 people. It doesn't have ESI or EPF arrangements as of now. They will start with it this month. But, the strength of 20 employees was reached in October '07. Do we pay a penalty?
Since we have 20 persons with us, should we go for ESI or EPF? Which one would be applicable for us, ESI or EPF?
Thanks in advance.
Regards,
From India, Delhi
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It has cleared my doubt. I have another query. The company has just completed 1 year and has a current strength of 20 people. It doesn't have ESI or EPF arrangements as of now. They will start with it this month. But, the strength of 20 employees was reached in October '07. Do we pay a penalty?
Since we have 20 persons with us, should we go for ESI or EPF? Which one would be applicable for us, ESI or EPF?
Thanks in advance.
Regards,
From India, Delhi
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Dear Friend, Gross salary=CTC - Employer PF. Thus if your gross is including PF Employer then it is NOT LEGAL.... However your Gross should include only PF Employee. Thanks!! Regards, Shraddha
From India, Pune
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From India, Pune
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Dear New,
Yes, definitely you must enroll it with ESI as well as PF. The case is the same for both ESI and PF. Of course, a penalty may be charged, but it's better not to take more time and consult with the local ESI and PF offices.
For more details on these Acts, visit the links below:
- [ESI Link](http://www.esic.nic.in)
- [PF Link](http://www.epfindia.com)
Regards,
Amit Seth
From India, Ahmadabad
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Yes, definitely you must enroll it with ESI as well as PF. The case is the same for both ESI and PF. Of course, a penalty may be charged, but it's better not to take more time and consult with the local ESI and PF offices.
For more details on these Acts, visit the links below:
- [ESI Link](http://www.esic.nic.in)
- [PF Link](http://www.epfindia.com)
Regards,
Amit Seth
From India, Ahmadabad
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Dear Parveen,
The practice of considering the Employer PF Contributions in GROSS is not common. The term 'GROSS' refers to the earnings by an employee before actual deductions occur (e.g., ESI, P.F, and PTax). 'NET SALARY' is the amount of salary that the employee receives after deductions from 'GROSS'.
The term 'CTC' and its components vary from company to company and generally refer to the cost that the company bears for an employee. Hence, it includes Employers PF, ESI Contribution, Mediclaim, etc.
I hope there is clarity now.
Jayesh Yohannan
Executive - HR
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The practice of considering the Employer PF Contributions in GROSS is not common. The term 'GROSS' refers to the earnings by an employee before actual deductions occur (e.g., ESI, P.F, and PTax). 'NET SALARY' is the amount of salary that the employee receives after deductions from 'GROSS'.
The term 'CTC' and its components vary from company to company and generally refer to the cost that the company bears for an employee. Hence, it includes Employers PF, ESI Contribution, Mediclaim, etc.
I hope there is clarity now.
Jayesh Yohannan
Executive - HR
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Dear Fellow HR, As per the Salary slip components posted by me the employer contribution is shown as part of the total salary in the payslip! How can any organisation show this???
From India
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From India
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All earnings and deductions form a Gross Salary.
Gross Salary = Net salary + deduction + bonuses or any variable component.
Net Salary = Net take-home.
PF will be part of Gross and should not be included in Net salary.
Regards,
Rishikesh Shinde
From United Kingdom, London
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Gross Salary = Net salary + deduction + bonuses or any variable component.
Net Salary = Net take-home.
PF will be part of Gross and should not be included in Net salary.
Regards,
Rishikesh Shinde
From United Kingdom, London
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Dear Friends Great! Now tell me what to do when an MNC organisation takes Employee contribution as part of gross salary? How is it that they can get away with it?
From India
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From India
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Dear Vibhor Gupta,
In the calculation of net salary, it is determined by deducting the gross salary (basic + other allowances) from which various deductions such as PF, ESI, TDS, and other deductions are subtracted.
However, in the CTC (cost to company) calculation, companies incorporate the total cost along with the company's PF contribution.
I hope this clarifies the distinction for you.
Regards,
Vibhor Gupta
From India, Chandigarh
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In the calculation of net salary, it is determined by deducting the gross salary (basic + other allowances) from which various deductions such as PF, ESI, TDS, and other deductions are subtracted.
However, in the CTC (cost to company) calculation, companies incorporate the total cost along with the company's PF contribution.
I hope this clarifies the distinction for you.
Regards,
Vibhor Gupta
From India, Chandigarh
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Hi,
The employer's PF contribution here comes under the CTC part. Nowadays, most of the private sector companies are adopting this culture to recruit new entrants in the organization based on negotiations on CTC rather than salary or gross salary.
However, the salary slip can vary from organization to organization. Some companies display every component of CTC in the salary slip, while others only show deductions of the employee's contribution from CTC.
Regards,
Nishu Bhatia
From India, Gurgaon
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The employer's PF contribution here comes under the CTC part. Nowadays, most of the private sector companies are adopting this culture to recruit new entrants in the organization based on negotiations on CTC rather than salary or gross salary.
However, the salary slip can vary from organization to organization. Some companies display every component of CTC in the salary slip, while others only show deductions of the employee's contribution from CTC.
Regards,
Nishu Bhatia
From India, Gurgaon
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As per the PF Act of 1952, the contribution of an employee is based on their wage only. Here, wage means Basic + DA (VDA) and should not exceed 6,500/-. The contribution is equal from both the employer and the employee at 12%.
The contribution of an employee is directly added to the Employee Provident Fund. The contribution made by the employer, which is 8.33%, goes towards the Employee Pension Scheme, and the remaining amount goes to the Provident Fund.
For more details, please send an email to my email address.
From India, Visakhapatnam
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The contribution of an employee is directly added to the Employee Provident Fund. The contribution made by the employer, which is 8.33%, goes towards the Employee Pension Scheme, and the remaining amount goes to the Provident Fund.
For more details, please send an email to my email address.
From India, Visakhapatnam
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As per the PF Act 1952, the contribution of an employee is based on his wage only. Here, wage means Basic + DA (VDA) only and the wage should not exceed 6,500/-. The contribution is equal from both the employer and employee, with the contribution set at 12%.
The contribution of an employee is directly added to the Employee Provident Fund. The contribution made by the employer of 8.33% goes to the Employee Pension Scheme, and the remaining amount goes to the Provident Fund.
For more details, please send an email to my email address: ravi_susarapuhr@yahoo.co.in.
From India, Visakhapatnam
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The contribution of an employee is directly added to the Employee Provident Fund. The contribution made by the employer of 8.33% goes to the Employee Pension Scheme, and the remaining amount goes to the Provident Fund.
For more details, please send an email to my email address: ravi_susarapuhr@yahoo.co.in.
From India, Visakhapatnam
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Dear Praveen,
I do agree with Amit. CTC is all the expenses which a company bears for its employees directly or indirectly. The thing is the PF contribution, which the company bears, should be shown in the CTC, and in the payslip, it should not be displayed as it goes directly to the PF Account. However, it should be clarified with the employee during salary negotiation, and the appointment letter should include this clause. Then everything will be settled.
Secondly, the MNCs adopt this practice as they have to show the total expenses given as salaries to receive tax exemption. Salaries given to employees are tax-exempt.
Regards,
Sindhu Pillai
From India, Bhopal
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I do agree with Amit. CTC is all the expenses which a company bears for its employees directly or indirectly. The thing is the PF contribution, which the company bears, should be shown in the CTC, and in the payslip, it should not be displayed as it goes directly to the PF Account. However, it should be clarified with the employee during salary negotiation, and the appointment letter should include this clause. Then everything will be settled.
Secondly, the MNCs adopt this practice as they have to show the total expenses given as salaries to receive tax exemption. Salaries given to employees are tax-exempt.
Regards,
Sindhu Pillai
From India, Bhopal
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GROSS SALARY&CTC FOR 15500.xls