Dear Seniors,
I want to ask a query regarding PF deduction. One of my friends is working in a pharma company. His salary details are as follows:
Basic: 2500
HRA: 1450
Education Allowance: 400
Special Allowance: 3050
Conveyance: 800
CCA: 250
Medical Allowance: 1250
Monthly Total (A): 9700
PF: 300
Monthly Total (B): 10000
Gross Total (A+B): 12000
Daily Allowance: 155
I think he should get 9700/- in hand, but he receives 9400/-. Is it the right deduction or not?
When he asked his RSM, he was told that it's a PF deduction. But PF deduction should be from both sides, i.e., employee and employer, with an equal deduction.
Please suggest.
From India, Jaipur
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5I want to ask a query regarding PF deduction. One of my friends is working in a pharma company. His salary details are as follows:
Basic: 2500
HRA: 1450
Education Allowance: 400
Special Allowance: 3050
Conveyance: 800
CCA: 250
Medical Allowance: 1250
Monthly Total (A): 9700
PF: 300
Monthly Total (B): 10000
Gross Total (A+B): 12000
Daily Allowance: 155
I think he should get 9700/- in hand, but he receives 9400/-. Is it the right deduction or not?
When he asked his RSM, he was told that it's a PF deduction. But PF deduction should be from both sides, i.e., employee and employer, with an equal deduction.
Please suggest.
From India, Jaipur
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It is totaly wrong and elighal a company can not deducat both contribution form employees salary
From India, New Delhi
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From India, New Delhi
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Dear Rani,
If the salary is mentioned as CTC, the employer PF amount only will be given in the offer letter. Employee PF amount will not be shown, and it will be deducted from the salary. So, it is logical only. CTC means the cost to the company, which is given by the company; employee deductions are not to be given. There will also be PT.
Regards,
Swarna
From India, Hyderabad
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If the salary is mentioned as CTC, the employer PF amount only will be given in the offer letter. Employee PF amount will not be shown, and it will be deducted from the salary. So, it is logical only. CTC means the cost to the company, which is given by the company; employee deductions are not to be given. There will also be PT.
Regards,
Swarna
From India, Hyderabad
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Dear Rani,
As Ms. Swarna advised, this is logical only. When we calculate CTC, the co-contribution would be considered. In some cases, if the company has superannuation benefits, they would also be considered. Moreover, PF is a savings for your friend. Whenever he resigns, he can withdraw the amount or transfer it.
Regards,
Raghav
From India, Bangalore
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As Ms. Swarna advised, this is logical only. When we calculate CTC, the co-contribution would be considered. In some cases, if the company has superannuation benefits, they would also be considered. Moreover, PF is a savings for your friend. Whenever he resigns, he can withdraw the amount or transfer it.
Regards,
Raghav
From India, Bangalore
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The CTC to the company also includes Rs. 300 contributed by the company towards the company's share of PF. Thus, the total CTC to the company becomes Rs. 10,000.
After deducting Rs. 300 each as employees' and employers' contributions to PF, the net payment of the salary is correctly paid as Rs. 9,400.
TR Chhabria
From India, Gurgaon
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After deducting Rs. 300 each as employees' and employers' contributions to PF, the net payment of the salary is correctly paid as Rs. 9,400.
TR Chhabria
From India, Gurgaon
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Hi Rani,
I don't think there is anything wrong with it. His monthly gross salary is Rs. 9700, and after deducting Rs. 300, they have paid Rs. 9400. In fact, they should have deducted ESI employee contribution of 1.75% of Gross salary. Please check.
The company has shown Rs. 120000 as CTC (it includes Employer PF contribution also).
If you have any further queries, please let me know.
From India, Madras
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I don't think there is anything wrong with it. His monthly gross salary is Rs. 9700, and after deducting Rs. 300, they have paid Rs. 9400. In fact, they should have deducted ESI employee contribution of 1.75% of Gross salary. Please check.
The company has shown Rs. 120000 as CTC (it includes Employer PF contribution also).
If you have any further queries, please let me know.
From India, Madras
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You are saying that PF deduction is another thing & CTC is another thing. I understand about PF deduction. But pls let me explain about CTC.... Thanks Bnadna rani
From India, Jaipur
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From India, Jaipur
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Hi Rani,
I would like to provide further insight in this regard. As mentioned by Shiva, I completely agree that with a Monthly Salary of Rs.10,000, there should be a Mandatory Contribution of ESIC (i.e. 1.75% from the Employee side and 4.75% from the Employer's side) and PF (i.e. 12% from the Employee side and 13.61% from the Employer's Side). This will add up in the Gross Cost to Company. However, if we look at this Salary Structure provided by Rani, the Monthly Gross is Rs.10,000 [i.e. Rs.9700 (In Hand) + Rs.300 (Employee Contribution of PF)] and subsequently the Annual Amount is Rs.1,20,000. So, it is very evident that they have not included any other contribution amount here in this Annual Amount.
Hence, as per the above Salary Structure, the person should receive Rs.9700 as in-hand Salary and other deductions are apart from this Salary. Although the Annual Gross CTC here would be Rs.1,43,400. The break-up of the Salary is given below:
Basic Rs.2500
HRA Rs.1450
Education Allowance Rs.400
Special Allowance Rs.3050
Conveyance Rs.800
CCA Rs.250
Medical Allowance Rs.1250
Deductions:
PF (Employee) - Rs.720
ESIC (Employee) - Rs.170
TOTAL (A) Monthly Salary - Rs.10590
Total In-Hand Salary [A - (PF + ESIC)] - Rs.9700
Employer's Contribution:
PF (Employer) - Rs.720
ESIC (Employer) - Rs.640
TOTAL GROSS ANNUAL CTC - Rs.143400
This is a standard salary structure format. It might differ from Company to Company. I have tried my best to provide correct information. Any suggestions or corrections are most welcomed.
Thanks,
From India, Gurgaon
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I would like to provide further insight in this regard. As mentioned by Shiva, I completely agree that with a Monthly Salary of Rs.10,000, there should be a Mandatory Contribution of ESIC (i.e. 1.75% from the Employee side and 4.75% from the Employer's side) and PF (i.e. 12% from the Employee side and 13.61% from the Employer's Side). This will add up in the Gross Cost to Company. However, if we look at this Salary Structure provided by Rani, the Monthly Gross is Rs.10,000 [i.e. Rs.9700 (In Hand) + Rs.300 (Employee Contribution of PF)] and subsequently the Annual Amount is Rs.1,20,000. So, it is very evident that they have not included any other contribution amount here in this Annual Amount.
Hence, as per the above Salary Structure, the person should receive Rs.9700 as in-hand Salary and other deductions are apart from this Salary. Although the Annual Gross CTC here would be Rs.1,43,400. The break-up of the Salary is given below:
Basic Rs.2500
HRA Rs.1450
Education Allowance Rs.400
Special Allowance Rs.3050
Conveyance Rs.800
CCA Rs.250
Medical Allowance Rs.1250
Deductions:
PF (Employee) - Rs.720
ESIC (Employee) - Rs.170
TOTAL (A) Monthly Salary - Rs.10590
Total In-Hand Salary [A - (PF + ESIC)] - Rs.9700
Employer's Contribution:
PF (Employer) - Rs.720
ESIC (Employer) - Rs.640
TOTAL GROSS ANNUAL CTC - Rs.143400
This is a standard salary structure format. It might differ from Company to Company. I have tried my best to provide correct information. Any suggestions or corrections are most welcomed.
Thanks,
From India, Gurgaon
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Dear Rani,
There is no error in his basic salary, which is Rs. 2500. Therefore, the deducted amount for PF is correct. The PF amount is deducted based on the total of Basic + DA, calculated as follows:
- 12% from the employee's side (2500 * 12/100 = 300)
- 12% from the company's side (2500 * 12/100 = 300)
This means that a total of Rs. 600 will be deposited into his PF account monthly.
Thank you.
From India, Sholapur
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There is no error in his basic salary, which is Rs. 2500. Therefore, the deducted amount for PF is correct. The PF amount is deducted based on the total of Basic + DA, calculated as follows:
- 12% from the employee's side (2500 * 12/100 = 300)
- 12% from the company's side (2500 * 12/100 = 300)
This means that a total of Rs. 600 will be deposited into his PF account monthly.
Thank you.
From India, Sholapur
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Dear Kindly consider Prof Tax of Rs.175/- per month for deduction. Also check the policy of Daily allowance. Kindly study the labour laws deeply.
From United States, Toledo
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From United States, Toledo
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Dear Kindly consider Prof Tax of Rs.175/- per month for deduction. Also check the policy of Daily allowance. Kindly study the labour laws deeply.
From United States, Toledo
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From United States, Toledo
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Dear Zareen, Sorry for disturb you again.... I want to know how did u calculate employee PF 720 & employer ESIC 640. Plz explain in detail.........
From India, Jaipur
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From India, Jaipur
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Dear,
I am giving below two tables showing:
1) Pay Pocket
2) CTC (Cost to the company)
Any company, while recruiting an incumbent, will disclose the cost to the company, and the candidate has to verify the Gross pay with them.
1) Salary in Pay Pocket:
Basic 2500
HRA 1450
Edu Allowance 400
Spl. Allowance 3050
Conv. Allowance 800
CCA 250
Med. Allowance 1250
Total Gross 9700
Deductions from Salary:
PF @ 12% on Basic only 300
Net pay to the Employee 9400 (Gross - deductions)
2) CTC (Cost to the Company):
Basic 2500
HRA 1450
Edu Allowance 400
Spl. Allowance 3050
Conv. Allowance 800
CCA 250
Med. Allowance 1250
Total Gross 9700
PF Management contribution 300
CTC total 10000
By examining both tables, you can understand that there is no error in the deduction of PF from the salary. The PF deducted from Basic in this case is correct. Please note that his salary is Rs. 9700 only (Basic 2500 + Allowances 7200) and NOT 10000.
Just for your information, Rs. 300 deducted from his salary will go to his PF account, and another Rs. 300 (equal amount) paid by the management as Management contribution will go to his Pension account.
In his PF account, his contribution alone will accumulate with interest, and management's contribution will NOT be added to his account.
V. Selvaraj
Senior Executive (HR)
From India, Bangalore
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I am giving below two tables showing:
1) Pay Pocket
2) CTC (Cost to the company)
Any company, while recruiting an incumbent, will disclose the cost to the company, and the candidate has to verify the Gross pay with them.
1) Salary in Pay Pocket:
Basic 2500
HRA 1450
Edu Allowance 400
Spl. Allowance 3050
Conv. Allowance 800
CCA 250
Med. Allowance 1250
Total Gross 9700
Deductions from Salary:
PF @ 12% on Basic only 300
Net pay to the Employee 9400 (Gross - deductions)
2) CTC (Cost to the Company):
Basic 2500
HRA 1450
Edu Allowance 400
Spl. Allowance 3050
Conv. Allowance 800
CCA 250
Med. Allowance 1250
Total Gross 9700
PF Management contribution 300
CTC total 10000
By examining both tables, you can understand that there is no error in the deduction of PF from the salary. The PF deducted from Basic in this case is correct. Please note that his salary is Rs. 9700 only (Basic 2500 + Allowances 7200) and NOT 10000.
Just for your information, Rs. 300 deducted from his salary will go to his PF account, and another Rs. 300 (equal amount) paid by the management as Management contribution will go to his Pension account.
In his PF account, his contribution alone will accumulate with interest, and management's contribution will NOT be added to his account.
V. Selvaraj
Senior Executive (HR)
From India, Bangalore
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Hi Rani,
There is a correction in the PF Calculation. Please find the calculations:
PF is calculated on Basic *(i.e. Basic + DA).
*Note: this might differ in Salary Structure of Company to Company. Employer's contribution [13.61% = 12% + *1.61% (PF Admin Charges)] of Basic Salary [Though 1.61% does not include in Employee Cost to Company]. Employer's PF Contribution here: Basic = 2500 + 1450 = 3950. Contribution = 12% of 3950 = Rs. 474.
ESIC CONTRIBUTION
ESIC is calculated on Monthly Salary Rs. 9700. Employer's ESIC Contribution - [4.75% of Monthly in-hand Salary]. Contribution = 4.75% of 9700 = Rs. 640.
As per my knowledge, there is no Professional Tax applicable for Delhi state. Hope the clarification required is resolved. Would appreciate valuable inputs if there is any misunderstanding or any correction required.
From India, Gurgaon
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There is a correction in the PF Calculation. Please find the calculations:
PF is calculated on Basic *(i.e. Basic + DA).
*Note: this might differ in Salary Structure of Company to Company. Employer's contribution [13.61% = 12% + *1.61% (PF Admin Charges)] of Basic Salary [Though 1.61% does not include in Employee Cost to Company]. Employer's PF Contribution here: Basic = 2500 + 1450 = 3950. Contribution = 12% of 3950 = Rs. 474.
ESIC CONTRIBUTION
ESIC is calculated on Monthly Salary Rs. 9700. Employer's ESIC Contribution - [4.75% of Monthly in-hand Salary]. Contribution = 4.75% of 9700 = Rs. 640.
As per my knowledge, there is no Professional Tax applicable for Delhi state. Hope the clarification required is resolved. Would appreciate valuable inputs if there is any misunderstanding or any correction required.
From India, Gurgaon
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Dear, it is completly right because pf deduction is done only in basis and PF amount is deducting from Total A. Best Regards, lakhan Trivedi 0967481106
From India, Khopoli
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From India, Khopoli
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Thanks everyone for your reply......... Now Im able to understand the difference & I will tell him about these deductions............... THANKS BANDNA RANI
From India, Jaipur
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From India, Jaipur
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Ms. Bandana Rani,
- Going by the facts given by you, there is nothing wrong in the calculations and payment of your friend's salary.
- 12% of the basic is the employee's contribution, the same amount is contributed by the employer, and it is paid to PF authorities. Obviously, the employee's contribution is deducted from the salary, but the employer will not keep it; instead, it will be paid to PF authorities.
- If, in case you are not an HR Professional, your doubt is understandable. But in case you are an HR Professional, better buckle up and update your basic knowledge.
From India, Pune
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- Going by the facts given by you, there is nothing wrong in the calculations and payment of your friend's salary.
- 12% of the basic is the employee's contribution, the same amount is contributed by the employer, and it is paid to PF authorities. Obviously, the employee's contribution is deducted from the salary, but the employer will not keep it; instead, it will be paid to PF authorities.
- If, in case you are not an HR Professional, your doubt is understandable. But in case you are an HR Professional, better buckle up and update your basic knowledge.
From India, Pune
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Hi,
Please let us know if your friend's gross salary is Rs. 9700 or Rs. 10,000. If your friend's gross is Rs. 10,000, then according to the salary breakup, his basic salary is Rs. 2500 so Rs. 300 should be deducted from his salary for PF, and he gets Rs. 9700 in hand.
In the other case, if your friend's gross salary is Rs. 9700, then according to the salary breakup, his basic salary is Rs. 2500 so Rs. 300 should be deducted from his salary for PF, and he gets Rs. 9400 in hand.
Hope it's clear to you.
- Babu
From India, Madras
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Please let us know if your friend's gross salary is Rs. 9700 or Rs. 10,000. If your friend's gross is Rs. 10,000, then according to the salary breakup, his basic salary is Rs. 2500 so Rs. 300 should be deducted from his salary for PF, and he gets Rs. 9700 in hand.
In the other case, if your friend's gross salary is Rs. 9700, then according to the salary breakup, his basic salary is Rs. 2500 so Rs. 300 should be deducted from his salary for PF, and he gets Rs. 9400 in hand.
Hope it's clear to you.
- Babu
From India, Madras
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Dear Seniors,
I want to ask a query regarding PF deduction. One employee has a basic salary of 10000 and wants to contribute 10000 towards PF. If the same is possible, please inform us about the contribution amount in PF account no-01, A/C-02, A/C-10, and A/C-22.
With regards,
Vivek Singh
From India, Gurgaon
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I want to ask a query regarding PF deduction. One employee has a basic salary of 10000 and wants to contribute 10000 towards PF. If the same is possible, please inform us about the contribution amount in PF account no-01, A/C-02, A/C-10, and A/C-22.
With regards,
Vivek Singh
From India, Gurgaon
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Salary Sheet & PF PT Calculation & Challan Nov 2010.xls