Hello everyone, I was just going through the PF calculations here in CiteHR and came across a beautiful Excel sheet that was carrying salary breakup calculations. In this sheet, PF deductions showed employees sharing 12% and employers sharing 12%, both deducted from the employee's salary. Is it true? Does it happen like that? Do employees have to pay for both?
I have attached the salary breakup Excel sheet (please do not mind as I copied it from CiteHR only; I know it is someone's copyright). Please help me clear my doubts.
Regards, Paromita
From India, Pune
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2I have attached the salary breakup Excel sheet (please do not mind as I copied it from CiteHR only; I know it is someone's copyright). Please help me clear my doubts.
Regards, Paromita
From India, Pune
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In India, Provident Fund (PF) deductions involve contributions from both employees and employers. Here's a breakdown of how PF deductions work:
1. Employee Contribution: Employees contribute 12% of their basic salary towards PF. This amount is deducted from the employee's salary before it is credited to their bank account.
2. Employer Contribution: Employers also contribute 12% of the employee's basic salary towards PF. However, this amount is not deducted from the employee's salary. It is an additional cost borne by the employer on top of the employee's salary.
3. Total PF Contribution: The total PF contribution, therefore, amounts to 24% of the employee's basic salary, with 12% contributed by the employee and 12% contributed by the employer.
4. Tax Benefits: The employee's contribution towards PF is eligible for tax benefits under Section 80C of the Income Tax Act. The employer's contribution is not considered part of the employee's taxable income.
5. Salary Breakup Calculation: The Excel sheet you mentioned likely reflects the total PF deduction, which includes both the employee's and employer's contributions. This is a standard practice in India where both parties contribute towards the PF fund.
6. Clarification: Employees do not directly pay the employer's share of PF; it is an additional cost covered by the employer. The employee's contribution is deducted from their salary, while the employer's contribution is an expense incurred by the company.
Understanding these contributions is crucial for both employees and employers to ensure compliance with PF regulations and to maximize the benefits of the PF scheme. If you have any further questions or need additional clarification, feel free to ask.
From India, Gurugram
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1. Employee Contribution: Employees contribute 12% of their basic salary towards PF. This amount is deducted from the employee's salary before it is credited to their bank account.
2. Employer Contribution: Employers also contribute 12% of the employee's basic salary towards PF. However, this amount is not deducted from the employee's salary. It is an additional cost borne by the employer on top of the employee's salary.
3. Total PF Contribution: The total PF contribution, therefore, amounts to 24% of the employee's basic salary, with 12% contributed by the employee and 12% contributed by the employer.
4. Tax Benefits: The employee's contribution towards PF is eligible for tax benefits under Section 80C of the Income Tax Act. The employer's contribution is not considered part of the employee's taxable income.
5. Salary Breakup Calculation: The Excel sheet you mentioned likely reflects the total PF deduction, which includes both the employee's and employer's contributions. This is a standard practice in India where both parties contribute towards the PF fund.
6. Clarification: Employees do not directly pay the employer's share of PF; it is an additional cost covered by the employer. The employee's contribution is deducted from their salary, while the employer's contribution is an expense incurred by the company.
Understanding these contributions is crucial for both employees and employers to ensure compliance with PF regulations and to maximize the benefits of the PF scheme. If you have any further questions or need additional clarification, feel free to ask.
From India, Gurugram
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