Dear All, I am working as an HR executive in a new startup company. They have started deducting PF. However, they are deducting PF on CTC, which is creating a problem as the maximum salary gets deducted. For example, if my CTC is 20,000, they are deducting 1,200 as my contribution and 1,316 as the company's contribution from my CTC only. Can they do this?
From India, Mumbai
Acknowledge(0)
Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Hi, As per my knowledge it should not be like that. PF has to be 12% on basic and should not exceed 780/-. I think i am not wrong.
From India, Hyderabad
Acknowledge(0)Amend(0)
1From India, Hyderabad
Acknowledge(0)Amend(0)
Dear Your company is deducting more than as per the EPF rules, they have deduct 780 and contribution by the Employer also 780+Admin charges Need clarification pl contact 9866917232 Lakshminaryana
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
As per Employee Provident Scheme, PF contribution is done on earned Basic+ DA and the rate of contribution is 12%. Regards, Suresh
From India, Bangalore
Acknowledge(0)Amend(0)
From India, Bangalore
Acknowledge(0)Amend(0)
Proper Deduction of Provident Fund (PF)
It is not proper to deduct PF on CTC. As per Section 6 of the PF Act, the contribution has to be deducted on basic wages + DA + retaining allowance, if any paid + cash value of food concession, if any, subject to a maximum of Rs. 6500/- per month.
Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
Acknowledge(0)Amend(0)
It is not proper to deduct PF on CTC. As per Section 6 of the PF Act, the contribution has to be deducted on basic wages + DA + retaining allowance, if any paid + cash value of food concession, if any, subject to a maximum of Rs. 6500/- per month.
Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
Acknowledge(0)Amend(0)
I feel the queriest has not correctly presented his query. What I understood from the post is that the queriest is getting less money in his hand than what is agreed in CTC. There is a deduction of Employee share 12% and Employee share 13.61% from CTC.
Questions to the Querist
1. Is the employer's share considered as a cost in the CTC structure?
2. Are the deductions towards PF started by the company at a later stage on coverage, and was this PF component not considered in CTC?
CTC is the cost to the company on an employee. Whatever amount is spent by the company, the company can include it in CTC as a cost to it. The company can include the PF employer share in the CTC component. Many companies, in my experience, even include costs towards leave, gratuity premium, etc., in the CTC component, and in my opinion, they are not wrong.
HR professionals should first understand this concept of CTC and be transparent in explaining it to new entrants when deciding on their package deal.
I visit many corporates where I see HR professionals not understanding this concept, and they fail to convey it to employees effectively.
No company can make a deduction from your salary towards the employer's share/cost. But it is like the bottle is half empty.
I hope the viewers/readers of my post will understand my views properly. If not, at least they will not doubt my caliber as has been done in another thread very recently.
From India, Mumbai
Acknowledge(2)
Amend(0)
Questions to the Querist
1. Is the employer's share considered as a cost in the CTC structure?
2. Are the deductions towards PF started by the company at a later stage on coverage, and was this PF component not considered in CTC?
CTC is the cost to the company on an employee. Whatever amount is spent by the company, the company can include it in CTC as a cost to it. The company can include the PF employer share in the CTC component. Many companies, in my experience, even include costs towards leave, gratuity premium, etc., in the CTC component, and in my opinion, they are not wrong.
HR professionals should first understand this concept of CTC and be transparent in explaining it to new entrants when deciding on their package deal.
I visit many corporates where I see HR professionals not understanding this concept, and they fail to convey it to employees effectively.
No company can make a deduction from your salary towards the employer's share/cost. But it is like the bottle is half empty.
I hope the viewers/readers of my post will understand my views properly. If not, at least they will not doubt my caliber as has been done in another thread very recently.
From India, Mumbai
Acknowledge(2)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Provident Fund - Excluded Employee - Definition.pdf
What is Employee Provident Fund.docx