Hi,
I am a doctor working in an NGO-based hospital and medical college.
1. I want to know when a company is calculating CTC, does the calculation include both sides of PF, meaning PF contributions from both the employee and the employer, or only from the employee's side?
2. How much percentage of PF should be deducted?
3. Is there any criteria or method to ensure that PF is not included in CTC?
Dr. Chirag
From India, Ahmadabad
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I am a doctor working in an NGO-based hospital and medical college.
1. I want to know when a company is calculating CTC, does the calculation include both sides of PF, meaning PF contributions from both the employee and the employer, or only from the employee's side?
2. How much percentage of PF should be deducted?
3. Is there any criteria or method to ensure that PF is not included in CTC?
Dr. Chirag
From India, Ahmadabad
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Hi Chirag,
Though including PF contribution in CTC is correct, employers interpret it differently, and the EPF organization has strongly addressed this issue. This erroneous concept was introduced by MNCs and quickly spread. According to this approach, a total of 24% (on Basic + DA) will be deducted (12% on Ee & Er) every month. Does this sound different? Let me explain it clearly.
If the PF calculation is based on the annual CTC, then the monthly gross will be an odd figure. In addition to the 24% deduction towards PF, consider adding Income Tax and other deductions. What is left? A mere payslip with smiling figures in your hands.
Regards,
Chandru
From India, Madras
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41Though including PF contribution in CTC is correct, employers interpret it differently, and the EPF organization has strongly addressed this issue. This erroneous concept was introduced by MNCs and quickly spread. According to this approach, a total of 24% (on Basic + DA) will be deducted (12% on Ee & Er) every month. Does this sound different? Let me explain it clearly.
If the PF calculation is based on the annual CTC, then the monthly gross will be an odd figure. In addition to the 24% deduction towards PF, consider adding Income Tax and other deductions. What is left? A mere payslip with smiling figures in your hands.
Regards,
Chandru
From India, Madras
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Dear Doctor,
CTC is the term which in itself means Cost To Company. Here, the company will definitely add all fixed components which are a cost for you, either direct or indirect. PF, Gratuity, Bonus, Mediclaim, all these benefits are indirect costs which the company bears on your behalf. So, automatically, it is a part of your CTC but not a part of your gross salary.
Dear Mr. Chandru, nothing has been done smartly here. Earlier, it was the concept of Gross salary, but now the Company has started to show their actual cost which the company is paying for you directly or indirectly.
Regards,
Amit Seth.
From India, Ahmadabad
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CTC is the term which in itself means Cost To Company. Here, the company will definitely add all fixed components which are a cost for you, either direct or indirect. PF, Gratuity, Bonus, Mediclaim, all these benefits are indirect costs which the company bears on your behalf. So, automatically, it is a part of your CTC but not a part of your gross salary.
Dear Mr. Chandru, nothing has been done smartly here. Earlier, it was the concept of Gross salary, but now the Company has started to show their actual cost which the company is paying for you directly or indirectly.
Regards,
Amit Seth.
From India, Ahmadabad
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Dear Amith,
CTC includes EPF also, no doubt about it, dear. You are fully right. I stand to say that you are not supposed to deduct 24% from an employee in the monthly pay stub stating that Employer PF is already included in CTC. Hope you got it right.
For your kind information, those were the 'smart' words of PF Commissioner - Chennai (Retd.) zone who spoke to me and not framed by me. The EPFO served notice for the said reason to the CEO of a US-based MNC in Chennai where I worked earlier. For obvious reasons, I am withholding the name of that MNC. When the first HR manager occupant makes a mistake, it travels a long way till rectified.
In a month, you are supposed to deduct only 12% of PF from the employee and not 24%. It has to be one EePF deduction and Er PF Contribution in a payslip. This is what the EPFO states strongly.
But what happens now is, in the name of CTC, 24% is deducted from an employee every month to justify that CTC also includes ErPF contribution. If 'lunch is provided,' then you are supposed to provide 'drinking water' also. The new justification says that water is already included in buttermilk and gravy, then why contribute separately.
Later, we all received a letter from the CEO with a copy of PF Commissioner's notice stating that the error had been rectified and the ErPF amount deducted from us will be refunded and credited to our account.
I hope the words have conveyed my thoughts.
Regards,
Chandru
From India, Madras
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CTC includes EPF also, no doubt about it, dear. You are fully right. I stand to say that you are not supposed to deduct 24% from an employee in the monthly pay stub stating that Employer PF is already included in CTC. Hope you got it right.
For your kind information, those were the 'smart' words of PF Commissioner - Chennai (Retd.) zone who spoke to me and not framed by me. The EPFO served notice for the said reason to the CEO of a US-based MNC in Chennai where I worked earlier. For obvious reasons, I am withholding the name of that MNC. When the first HR manager occupant makes a mistake, it travels a long way till rectified.
In a month, you are supposed to deduct only 12% of PF from the employee and not 24%. It has to be one EePF deduction and Er PF Contribution in a payslip. This is what the EPFO states strongly.
But what happens now is, in the name of CTC, 24% is deducted from an employee every month to justify that CTC also includes ErPF contribution. If 'lunch is provided,' then you are supposed to provide 'drinking water' also. The new justification says that water is already included in buttermilk and gravy, then why contribute separately.
Later, we all received a letter from the CEO with a copy of PF Commissioner's notice stating that the error had been rectified and the ErPF amount deducted from us will be refunded and credited to our account.
I hope the words have conveyed my thoughts.
Regards,
Chandru
From India, Madras
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hi, ya CTC covers BOTH THE eMPLOYEE 12% Employer 13.61% included in Ctc itself there is no way otherway Ctc will Cover complete cost to company incured for tht person will be included in CT
From India, Pondicherry
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From India, Pondicherry
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Conceptually, one has to understand what CTC means. It means to hire a candidate, what is the cost involved? Hence, it is the company's contribution 12% to be taken as CTC, not the employee's share.
Hope the matter is clear.
From India, Mumbai
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Hope the matter is clear.
From India, Mumbai
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Hi,
I am a doctor working in an NGO-based hospital and medical college. I have a few questions regarding CTC and PF contributions:
1. I want to know if when a company calculates CTC, does it include both sides of PF contributions, i.e., PF from the employee and the employer, or is it only one-sided, i.e., from the employee's side?
Answer: CTC includes both sides of PF contributions, i.e., from both the employer and the employee.
2. How much percentage of PF should be deducted?
Answer: 12% on the employee's side and 12% on the employer's side, with the employer also responsible for an additional 1.61% as admin charges.
3. Is there a criteria or method to exclude PF from CTC?
Answer: No, there is no available criteria or method to exclude PF from CTC.
I hope this answers your questions.
Regards,
Pankaj Chandan
From India, New delhi
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I am a doctor working in an NGO-based hospital and medical college. I have a few questions regarding CTC and PF contributions:
1. I want to know if when a company calculates CTC, does it include both sides of PF contributions, i.e., PF from the employee and the employer, or is it only one-sided, i.e., from the employee's side?
Answer: CTC includes both sides of PF contributions, i.e., from both the employer and the employee.
2. How much percentage of PF should be deducted?
Answer: 12% on the employee's side and 12% on the employer's side, with the employer also responsible for an additional 1.61% as admin charges.
3. Is there a criteria or method to exclude PF from CTC?
Answer: No, there is no available criteria or method to exclude PF from CTC.
I hope this answers your questions.
Regards,
Pankaj Chandan
From India, New delhi
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Doctor,
The cost to the company is only the 'Cost being incurred by the Company' on an employee, directly as well as indirectly. Directly, it includes salary, allowances, medical expenses, etc., whereas indirectly, it covers PF, Gratuity, pension, etc. Based on your basic pay and dearness allowance, 12% of the total amount has to be paid as a contribution by the employer every month to the PF account. (Someone mentioned 24%, which is incorrect as the employee's contribution is not part of the CTC since it is paid by the employee from the basic pay and DA, which are already included in the CTC. Therefore, double counting is not allowed as per a Supreme Court decision (I apologize for not remembering the case at the moment).
Multinational corporations typically include the employer PF contribution as part of the CTC.
Gopan
From India, Kochi
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The cost to the company is only the 'Cost being incurred by the Company' on an employee, directly as well as indirectly. Directly, it includes salary, allowances, medical expenses, etc., whereas indirectly, it covers PF, Gratuity, pension, etc. Based on your basic pay and dearness allowance, 12% of the total amount has to be paid as a contribution by the employer every month to the PF account. (Someone mentioned 24%, which is incorrect as the employee's contribution is not part of the CTC since it is paid by the employee from the basic pay and DA, which are already included in the CTC. Therefore, double counting is not allowed as per a Supreme Court decision (I apologize for not remembering the case at the moment).
Multinational corporations typically include the employer PF contribution as part of the CTC.
Gopan
From India, Kochi
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Dear All,
CTC includes all the costs which the company incurs for an employee. CTC includes Gross Salary. Therefore, we cannot include PF Employees' Contribution again because we deduct 12% (of Basic + DA) from Gross Salary. The same applies in the case of ESIC (if applicable). However, the employer's contribution of 13.61% (of Basic + DA) has to be included.
As correctly said by Gopan...
Sandeep Kulkarni
From India, Vadodara
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CTC includes all the costs which the company incurs for an employee. CTC includes Gross Salary. Therefore, we cannot include PF Employees' Contribution again because we deduct 12% (of Basic + DA) from Gross Salary. The same applies in the case of ESIC (if applicable). However, the employer's contribution of 13.61% (of Basic + DA) has to be included.
As correctly said by Gopan...
Sandeep Kulkarni
From India, Vadodara
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Dear Friend,
If the total of Basic + DA is more than Rs. 6500/-, then it's the employee's choice to either contribute to the PF account or not. In case of non-contribution, there is no question of the employer's contribution.
Some companies do include both employer's and employee's contributions in CTC, though it's not right. This was even the case in the manufacturing company where I was working.
Bina
From India, Delhi
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If the total of Basic + DA is more than Rs. 6500/-, then it's the employee's choice to either contribute to the PF account or not. In case of non-contribution, there is no question of the employer's contribution.
Some companies do include both employer's and employee's contributions in CTC, though it's not right. This was even the case in the manufacturing company where I was working.
Bina
From India, Delhi
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Dear I am sending you an attachment of salary break up...hope it will clear all your doubts....
From India, Calcutta
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From India, Calcutta
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Also a employee can voluntarily contribute in his pf account more than the amount {(Basic+Da)*12%.}
From India, Calcutta
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From India, Calcutta
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The question is very clear. CTC considers only the employer's contribution (12%) and that has been the practice in the industry, including MNCs. If any company is considering the employee's contribution too, it is purely unethical.
K K Anirudhan
From India, Kochi
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K K Anirudhan
From India, Kochi
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Employee Benefits.doc
CTC CALCULATION SHEET.xls