Dear Members, I have a query regarding PF deduction. My friend is working in a startup MNC. His salary breakup is mentioned below:
Basic Salary - 15,998
HRA - 6,399
Conveyance Allowances - 1,600
Medical Allowances - 1,250
Special Allowances - 10,304
Total Gross Salary - 35,550
PF contribution by the employee - 1,800
Net Salary - 33,750
Employer PF contribution - 1,950
CTC - 37,500
In my understanding, employee and employer-side PF contribution rates are supposed to be 12%. However, they are deducting it by 13% (12% PF + 1% admin charges).
Is this the correct deduction or not? Please suggest.
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Basic Salary - 15,998
HRA - 6,399
Conveyance Allowances - 1,600
Medical Allowances - 1,250
Special Allowances - 10,304
Total Gross Salary - 35,550
PF contribution by the employee - 1,800
Net Salary - 33,750
Employer PF contribution - 1,950
CTC - 37,500
In my understanding, employee and employer-side PF contribution rates are supposed to be 12%. However, they are deducting it by 13% (12% PF + 1% admin charges).
Is this the correct deduction or not? Please suggest.
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Hi, Of late it has become common among IT sector to employer contribution PF to the CTC of the employee. But recovering Admin charges also from employees is not ethical.
From India, Madras
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1015From India, Madras
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Salary Processing and CTC Components
Salary is processed by many organizations from the CTC. The employer's portion of EPF is a part of the CTC. Then the employer can deduct it. It is nothing but an addition to the earning side and then a deduction.
Illegal Deduction of Admin Charge
However, the way the salary structure has been shown, it appears that the employer is wrongly deducting the admin charge, which is illegal.
Please check in detail and understand the situation properly.
Regards, S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity.
From India, New Delhi
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Salary is processed by many organizations from the CTC. The employer's portion of EPF is a part of the CTC. Then the employer can deduct it. It is nothing but an addition to the earning side and then a deduction.
Illegal Deduction of Admin Charge
However, the way the salary structure has been shown, it appears that the employer is wrongly deducting the admin charge, which is illegal.
Please check in detail and understand the situation properly.
Regards, S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity.
From India, New Delhi
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Hello, we are discussing CTC (Cost to Company), which refers to the total salary package of an employee. It includes all monthly components such as basic pay, reimbursements, various allowances, and all annual components such as gratuity, annual variable pay, annual bonus, etc. This is a legal entity, so don't be confused. If the employer has mentioned in the salary breakup 12% and 13%, then there's no problem.
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PF NO Contribution on CTC.pdf
Employee Benefits.doc