Hi all,
I have been provided with an offer from a company based out of Bangalore. This company has provided me a breakup of my salary structure, under which basic pay is 60% of committed CTC, HRA is 50% of basic, and the rest being small components like Food allowance, travel allowance, special allowance, etc., being Rs. 1000, Rs. 3000, Rs. 2600 respectively.
My concerns are:
1. My basic pay is 46k per month (which is quite surprising, as the gross per month is 77k). Despite the basic being so high, my PF contribution is a mere Rs. 780. When I checked with the HR person on the other end, he said there is some rule in the Karnataka government, which they are following. Under this rule, both the employee and employer contribute a flat Rs. 780 as PF. Can someone please clarify, as far as I know, the PF should be 12% of basic and DA.
2. Such a high basic pay would increase my tax liabilities manifold. Can someone provide their opinion on this?
Thanks in advance.
Regards.
From India, Indore
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I have been provided with an offer from a company based out of Bangalore. This company has provided me a breakup of my salary structure, under which basic pay is 60% of committed CTC, HRA is 50% of basic, and the rest being small components like Food allowance, travel allowance, special allowance, etc., being Rs. 1000, Rs. 3000, Rs. 2600 respectively.
My concerns are:
1. My basic pay is 46k per month (which is quite surprising, as the gross per month is 77k). Despite the basic being so high, my PF contribution is a mere Rs. 780. When I checked with the HR person on the other end, he said there is some rule in the Karnataka government, which they are following. Under this rule, both the employee and employer contribute a flat Rs. 780 as PF. Can someone please clarify, as far as I know, the PF should be 12% of basic and DA.
2. Such a high basic pay would increase my tax liabilities manifold. Can someone provide their opinion on this?
Thanks in advance.
Regards.
From India, Indore
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Hi,
As per the PF rules and regulations, PF can only be deducted up to a ceiling limit of Rs. 6,500.00 at a rate of 12%, which amounts to Rs. 780.00. Therefore, your company is correctly deducting your PF contributions from your salary.
Mohan Rao
Manager HR
From India, Visakhapatnam
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24As per the PF rules and regulations, PF can only be deducted up to a ceiling limit of Rs. 6,500.00 at a rate of 12%, which amounts to Rs. 780.00. Therefore, your company is correctly deducting your PF contributions from your salary.
Mohan Rao
Manager HR
From India, Visakhapatnam
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The standard rate to determine the basic is 40% of CTC for non-metro cities or 50% for metro cities. PF deduction is okay, as they have set a ceiling as rightly mentioned by Mohan. However, you can ask them to contribute the actual 12% of the basic as it will result in significant savings for you. I don't think they should have any problem as ultimately that amount will be deducted from your CTC, leading to a lower cash in hand amount.
Regards,
From India, New Delhi
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Regards,
From India, New Delhi
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The PF scheme mentions the upper basic level for PF deduction as Rs. 6500/-. However, it also specifies that the employee can contribute more to the fund through mutual understanding between the employee and the employer.
Also, Sharmaneesu; the organization might have a problem because the employer's contribution part of the PF would significantly increase if we raise Mayank's PF contribution.
Regarding the percentage of CTC as the basic amount, there is no specific rule. However, the generally accepted percentage ranges from 35% to 45%.
From India
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Also, Sharmaneesu; the organization might have a problem because the employer's contribution part of the PF would significantly increase if we raise Mayank's PF contribution.
Regarding the percentage of CTC as the basic amount, there is no specific rule. However, the generally accepted percentage ranges from 35% to 45%.
From India
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The above discussions have clarified that the employer is correctly limiting the contribution to Rs. 780/- per month. If you wish to contribute a higher amount to your PF account, you can advise your employer to deduct some percentage of the basic salary as voluntary PF. In this case, the employer would not contribute anything to your PF except the statutory amount of Rs. 780/-. This way, you can contribute more to your PF account and also save tax. Hope this would help you.
From India, New Delhi
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From India, New Delhi
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Yes, gratuity and PF can be paid together. In fact, most organizations are covered under both PF and Gratuity laws. If you have a specific query, please state it clearly so that we can assist you.
From India, New Delhi
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From India, New Delhi
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The law only covers minimum wages to check labor exploitation. Since your CTC and basic are much higher, no law is applicable and varies from company to company. The basic is generally limited, as employers' share of bonus, EL, gratuity, LTC, etc., are linked to it. The PF component has a ceiling as explained above, i.e., Rs 780/- per month; however, your share can be increased equivalent to your basic and is advised as the best form of safe saving. Do remember that your pension (8.33% share of the employer) is applicable to you too after 10 years of service.
From India, Delhi
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From India, Delhi
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Clubbing of allowances with basic pay under PF Act.pdf
Designing pay Structure, Levels, and Mix.ppt