Dear All HRM Professionals,
I have been facing a lot of confusion over this issue. I want to know, can the employer's contribution of PF Fund be deducted from the Annual CTC of the employee? Is it a good practice?
In my company, this is the practice. Now, in the month of July, everyone's salary has been increased wef. 1st Jan 2012. I was supposed to calculate the PF arrears. I have calculated it by referring to the previous year's calculation of the same. Similarly, I was also asked to deduct the Employer's contribution for PF. When I have completed all the work as per the previous format, accounts are replying that I should have deducted it from the annual CTC. As per the previous format, employer's PF contribution appears in the deduction column.
Please guide me about the correct and legal process. I am the only person handling the HR dept.
Please help me.
Regards,
Pallavi
From India, Bangalore
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2I have been facing a lot of confusion over this issue. I want to know, can the employer's contribution of PF Fund be deducted from the Annual CTC of the employee? Is it a good practice?
In my company, this is the practice. Now, in the month of July, everyone's salary has been increased wef. 1st Jan 2012. I was supposed to calculate the PF arrears. I have calculated it by referring to the previous year's calculation of the same. Similarly, I was also asked to deduct the Employer's contribution for PF. When I have completed all the work as per the previous format, accounts are replying that I should have deducted it from the annual CTC. As per the previous format, employer's PF contribution appears in the deduction column.
Please guide me about the correct and legal process. I am the only person handling the HR dept.
Please help me.
Regards,
Pallavi
From India, Bangalore
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Dear Sir, Thanks for replying. But its been deducting twice, before the calculation of monthly gross salary and also after the calculation of Monthly Gross. Is it legal????? Regards, Pallavi
From India, Bangalore
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From India, Bangalore
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why you are confused? kindly calculate on the basis of Monthly Salary. If any confusion then reply.
From India, Ghaziabad
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From India, Ghaziabad
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Dear Pallavi,
Regarding your concern:
1. For the increment effecting on July with the effective date of 1st Jan 12, you should deduct both Employee PF and Employer contributions from 1st Jan for PF arrears. This deduction should not be from the CTC but should be contributed by both parties.
2. It is not feasible to deduct before the gross. The breakdown should be as follows:
a. Total Earnings = Gross
b. Total Deductions
c. Grand Total = Net (take home)
Additionally, PF cannot be deducted from the Annual CTC.
If you need any clarification, please feel free to call me.
From India, Madras
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Regarding your concern:
1. For the increment effecting on July with the effective date of 1st Jan 12, you should deduct both Employee PF and Employer contributions from 1st Jan for PF arrears. This deduction should not be from the CTC but should be contributed by both parties.
2. It is not feasible to deduct before the gross. The breakdown should be as follows:
a. Total Earnings = Gross
b. Total Deductions
c. Grand Total = Net (take home)
Additionally, PF cannot be deducted from the Annual CTC.
If you need any clarification, please feel free to call me.
From India, Madras
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Simply speaking, CTC is the amount that you cost your company. That is, it is the amount that the company spends – directly or indirectly – because of employing you.
Thus, it is the money given to you (your in-hand component), plus the money spent because of you.
From India, Bangalore
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Thus, it is the money given to you (your in-hand component), plus the money spent because of you.
From India, Bangalore
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Dear Sir,
Thank you so much for the clarification! I have done the same. I have deducted arrears PF contributions of both the employee and employer from the arrears wages. However, my accounting department is asking me to deduct the employer contribution from the revised CTC itself.
Regards,
Pallavi
From India, Bangalore
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Thank you so much for the clarification! I have done the same. I have deducted arrears PF contributions of both the employee and employer from the arrears wages. However, my accounting department is asking me to deduct the employer contribution from the revised CTC itself.
Regards,
Pallavi
From India, Bangalore
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Hi Pallavi Not to worry. deductions under CTC means total cost to the company. Don’t get confused. Deduct PF on Basic + DA. Calculate even employer contribution of PF so it is CTC.
From India, Bangalore
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From India, Bangalore
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Dear Pallavi,
CTC means the cost to the company, including all the amounts incurred by the company for you. Therefore, both the employer's and employees' contributions can be deducted from the CTC. However, the company cannot deduct the employer's contribution from the employees' salary as per paragraph 31 of the Employees' Provident Fund Scheme.
From India, Kochi
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CTC means the cost to the company, including all the amounts incurred by the company for you. Therefore, both the employer's and employees' contributions can be deducted from the CTC. However, the company cannot deduct the employer's contribution from the employees' salary as per paragraph 31 of the Employees' Provident Fund Scheme.
From India, Kochi
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CTC does contain the share of PF employer share. It is an industry practice. Cost to company comprises components like basic, DA, HRA, allowances under gross salary, and other components like LTA, medical reimbursement, etc., under annual components. Also, the employer incurs additional expenditure on employee contributions (as a whole in respect of all employees) like PF, ESI, gratuity, health insurance, life term, etc., if any.
As these are a part of CTC, whenever revisions take place retrospectively, you can calculate and arrive at employer share pay arrears as per the Act.
From India, Hyderabad
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As these are a part of CTC, whenever revisions take place retrospectively, you can calculate and arrive at employer share pay arrears as per the Act.
From India, Hyderabad
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Hello Pallavi,
CTC includes both employee and employer PF contributions. From January to July, you had already deducted PF on a regular basis. Now, you have to calculate and deduct PF (employee and employer's contribution) from arrears only.
Regards,
Kamalakar
From United States, Cambridge
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CTC includes both employee and employer PF contributions. From January to July, you had already deducted PF on a regular basis. Now, you have to calculate and deduct PF (employee and employer's contribution) from arrears only.
Regards,
Kamalakar
From United States, Cambridge
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Dear All HR Professionals,
Thank you so much for the guidance and support. I kindly request you to review the PF arrears calculation sheet attached herewith. Please inform me of the appropriate method to calculate PF arrears.
Regards,
Pallavi
From India, Bangalore
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Thank you so much for the guidance and support. I kindly request you to review the PF arrears calculation sheet attached herewith. Please inform me of the appropriate method to calculate PF arrears.
Regards,
Pallavi
From India, Bangalore
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Hi Pallavi,
We have already made the maximum contributions in our monthly returns for each employee. If an employee receives arrear payments in the month of April, do we need to contribute any amount towards the arrears? Please clarify as I was a bit confused about this.
Regards,
Laxmikanth
HR Executive
From India, Hyderabad
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We have already made the maximum contributions in our monthly returns for each employee. If an employee receives arrear payments in the month of April, do we need to contribute any amount towards the arrears? Please clarify as I was a bit confused about this.
Regards,
Laxmikanth
HR Executive
From India, Hyderabad
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PF NO Contribution on CTC.pdf
Salary Sheet & PF PT Calculation & Challan Nov 2010.xls