Respected Seniors,
I am working in a manufacturing unit. My company deducts PF 12% and ESI from all employees. Recently, they have started deducting PF 24%, bonus 16%, and ESI from new employees. My question is whether my company is entitled to make these deductions without any written documents from the PF office or change the salary structure without notice from any office.
Kindly help me by explaining about CTC.
Thanks & regards,
From India, Ambala
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7I am working in a manufacturing unit. My company deducts PF 12% and ESI from all employees. Recently, they have started deducting PF 24%, bonus 16%, and ESI from new employees. My question is whether my company is entitled to make these deductions without any written documents from the PF office or change the salary structure without notice from any office.
Kindly help me by explaining about CTC.
Thanks & regards,
From India, Ambala
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Dear Mr. Atul,
How can a company change its salary structure? As per statutory compliance, my company is already registered in PF and deducts 12% of all employees' salaries. However, it has now started deducting 24% of the PF from newly joined employees' salaries. Is this in accordance with the law? Kindly advise.
Thanks and regards,
From India, Ambala
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How can a company change its salary structure? As per statutory compliance, my company is already registered in PF and deducts 12% of all employees' salaries. However, it has now started deducting 24% of the PF from newly joined employees' salaries. Is this in accordance with the law? Kindly advise.
Thanks and regards,
From India, Ambala
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Dear Heena,
Please understand the difference between Net Pay, Gross Pay, and CTC.
Net Pay means whatever you are getting in your hand, otherwise known as Take-home salary.
Gross Pay means whatever is shown on your payslip before deducting the PF (12%), ESI (1.75%), Income Tax, any Salary Savings Insurance scheme, etc.
CTC means the company spends on you everything that will be added, like Employer PF (12%), Employer ESI (4.75%), all perquisites, and whatever you receive in kind (like accommodation, Canteen Lunch/Tea/Snacks subsidy, Conveyance Vehicle, Uniforms, or Factory Suits Provided, etc.).
Always ensure you confirm the same from your Offer of employment issued to you by the company for real clarification. Whatever they mention about the compensation package in your offer letter as CTC, Gross, or Net Pay.
Thank you.
From India, Kumbakonam
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Please understand the difference between Net Pay, Gross Pay, and CTC.
Net Pay means whatever you are getting in your hand, otherwise known as Take-home salary.
Gross Pay means whatever is shown on your payslip before deducting the PF (12%), ESI (1.75%), Income Tax, any Salary Savings Insurance scheme, etc.
CTC means the company spends on you everything that will be added, like Employer PF (12%), Employer ESI (4.75%), all perquisites, and whatever you receive in kind (like accommodation, Canteen Lunch/Tea/Snacks subsidy, Conveyance Vehicle, Uniforms, or Factory Suits Provided, etc.).
Always ensure you confirm the same from your Offer of employment issued to you by the company for real clarification. Whatever they mention about the compensation package in your offer letter as CTC, Gross, or Net Pay.
Thank you.
From India, Kumbakonam
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Thank you for your valuable reply. However, my question is, can my company deduct PF at 24% from new employees' salaries and not contribute from the employer's side, given that it deducts 12% PF from old employees? If so, is there any approval needed from any PF office?
Thanks & regards,
From India, Ambala
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Thanks & regards,
From India, Ambala
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Not required to take consent of the employees as such as the amount is being deducted & put in the pf ac. Employers are known to do that as best practices.
From India, Indore
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From India, Indore
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As per the EPF Act, the deduction of 12% of the employee and employer contributions are two different things. Additionally, the employer has to pay 1.61% as administrative charges on A/c 10 & A/c 22. Therefore, I fail to understand why they are not including this cost if it is a CTC arrangement.
According to the law, it is illegal to deduct the employer's contribution from the employee's share. You can file a complaint with the RPFC using your appointment letter where the gross salary is stated.
From India, Mumbai
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According to the law, it is illegal to deduct the employer's contribution from the employee's share. You can file a complaint with the RPFC using your appointment letter where the gross salary is stated.
From India, Mumbai
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Hello Heena,
All our colleagues have explained to you, i.e., both sides (employers & employees) of PF are part of CTC, which is correct. However, as you mentioned, your organization is also going to deduct a bonus of 16%, which is doubtful. Please check the deduction percentage of the bonus amount because, as per the applicable Bonus Act, no organization can deduct a bonus of more than 8.33% on basic + DA.
Regards,
Dnyaneshwar
From India, Pune
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All our colleagues have explained to you, i.e., both sides (employers & employees) of PF are part of CTC, which is correct. However, as you mentioned, your organization is also going to deduct a bonus of 16%, which is doubtful. Please check the deduction percentage of the bonus amount because, as per the applicable Bonus Act, no organization can deduct a bonus of more than 8.33% on basic + DA.
Regards,
Dnyaneshwar
From India, Pune
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Hello Anuradha,
CTC stands for Cost to Company, which includes all payable allowances for employees, both direct (such as basic salary) and indirect compensation (like deductions for PF, Bonus, LTA, ESI, etc.). According to the PF Act, administrative charges of 1.61% are not considered part of individual compensation; rather, they are service-related expenses that the employer is responsible for bearing. Therefore, no organization has the right to deduct admin charges from employees' salaries.
Regards, Dnyaneshwar
From India, Pune
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CTC stands for Cost to Company, which includes all payable allowances for employees, both direct (such as basic salary) and indirect compensation (like deductions for PF, Bonus, LTA, ESI, etc.). According to the PF Act, administrative charges of 1.61% are not considered part of individual compensation; rather, they are service-related expenses that the employer is responsible for bearing. Therefore, no organization has the right to deduct admin charges from employees' salaries.
Regards, Dnyaneshwar
From India, Pune
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SIR WHAT EVER THE DISCUSSION OF CTC -IS ABSOLUTELY CORRECT NOW COMMING TO NEW APT. SUPPOSE IF THE PERSON APTD. AND THE COMPANY SAY 7500/- PM THEN THE HOW THE CTC COMES Regards Satish
From India, Belgaum
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From India, Belgaum
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Dear HB, It is as per CTC , the employeer might been deducting both share from the employee only. Regards Kumar
From India, Bangalore
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From India, Bangalore
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Hi,
I am looking for a job change in an HR Generalist profile in Bangalore. Can anyone share the information? I have over 5 years of experience in an HR Generalist profile.
Mail to: vidyanayakh@gmail.com / 9902593269
From India, Bangalore
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I am looking for a job change in an HR Generalist profile in Bangalore. Can anyone share the information? I have over 5 years of experience in an HR Generalist profile.
Mail to: vidyanayakh@gmail.com / 9902593269
From India, Bangalore
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Hi Dnyaneshwar,
As you correctly mentioned, admin charges are not part of compensation. However, we are discussing CTC, and if the employer includes the costs associated with an employee in the employment contract, then the 1.61% is also a cost related to a specific employee. It is a cost that the company pays towards an employee to the government. Therefore, CTC should be 12% (employee) + 13.61% (employer) + ESI where applicable.
Additionally, a new ruling has increased the bonus limit to a minimum of 11% and a maximum of 20%.
Regards,
Anuradha
From India, Mumbai
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As you correctly mentioned, admin charges are not part of compensation. However, we are discussing CTC, and if the employer includes the costs associated with an employee in the employment contract, then the 1.61% is also a cost related to a specific employee. It is a cost that the company pays towards an employee to the government. Therefore, CTC should be 12% (employee) + 13.61% (employer) + ESI where applicable.
Additionally, a new ruling has increased the bonus limit to a minimum of 11% and a maximum of 20%.
Regards,
Anuradha
From India, Mumbai
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Hello Anuradha,
Thank you for updating us on the latest amendment in the bonus act. CTC (Cost to Company) refers to the contract between employers and employees for finalizing individual compensation benefits, which could be on a return basis, such as the PF amount, or involving future risk factors like ESI, WC premium, etc.
If you have noticed, PF administrative charges are neither part of the return-based compensation nor part of any risk factor compensation; therefore, they are not applicable to employees as they do not constitute compensation.
I hope this clarifies your doubts.
Regards, Dnyaneshwar
From India, Pune
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Thank you for updating us on the latest amendment in the bonus act. CTC (Cost to Company) refers to the contract between employers and employees for finalizing individual compensation benefits, which could be on a return basis, such as the PF amount, or involving future risk factors like ESI, WC premium, etc.
If you have noticed, PF administrative charges are neither part of the return-based compensation nor part of any risk factor compensation; therefore, they are not applicable to employees as they do not constitute compensation.
I hope this clarifies your doubts.
Regards, Dnyaneshwar
From India, Pune
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Dear all,
I have joined as an HR Generalist a few days back and am trying to understand the job. Please let me know if my understanding is correct.
CTC: Any cost incurred by the company in hiring.
Gross = CTC - (PF + gratuity contribution by the company)
Net = Gross - (PF + Professional tax)
Is my interpretation correct?
Thank you.
From India, Bangalore
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I have joined as an HR Generalist a few days back and am trying to understand the job. Please let me know if my understanding is correct.
CTC: Any cost incurred by the company in hiring.
Gross = CTC - (PF + gratuity contribution by the company)
Net = Gross - (PF + Professional tax)
Is my interpretation correct?
Thank you.
From India, Bangalore
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Hello All,
As explained by “boss2966” there are 3 classifications of salary.
1. Net Take Home
2. Gross
3. CTC
CTC is the part where most of the employers play with the compensation offered to the employee. Say, you are offered CTC Rs. 7500 then calculation will be like this... (assumption only)
Basic : 3200
Medical Allowance : 1250
HRA : 1495
Conveyance : 800
----------------------
Gross : 6745 (Part A)
Now ADD... (Though actualy it is deduction but it forms the whole CTC)
PF Employer Cont. : 435.52 (12% of Basic + 1.61 %Admin Charge)
ESI Employer cont. : 320.39 (4.75 % of Gross)
-----------------------
CTC : 7500.91 (Part B)
Less ...
PF Employee Cont. : 384 (12% of Basic)
ESI Employee Cont. : 118.04 (1.75% of Gross)
502.04 (Part C)
----------------------
NET TAKE HOME : Part A – Part C
: = 6243
From above calculation, now you must have come to know what exact net take home salary would be
From India, Mumbai
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As explained by “boss2966” there are 3 classifications of salary.
1. Net Take Home
2. Gross
3. CTC
CTC is the part where most of the employers play with the compensation offered to the employee. Say, you are offered CTC Rs. 7500 then calculation will be like this... (assumption only)
Basic : 3200
Medical Allowance : 1250
HRA : 1495
Conveyance : 800
----------------------
Gross : 6745 (Part A)
Now ADD... (Though actualy it is deduction but it forms the whole CTC)
PF Employer Cont. : 435.52 (12% of Basic + 1.61 %Admin Charge)
ESI Employer cont. : 320.39 (4.75 % of Gross)
-----------------------
CTC : 7500.91 (Part B)
Less ...
PF Employee Cont. : 384 (12% of Basic)
ESI Employee Cont. : 118.04 (1.75% of Gross)
502.04 (Part C)
----------------------
NET TAKE HOME : Part A – Part C
: = 6243
From above calculation, now you must have come to know what exact net take home salary would be
From India, Mumbai
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As per the PF Act, the employer has to pay their contribution towards PF and other administrative charges, which amounts to 13.61%. They are only required to deduct 12% from the salary of the employee. If you check your payslip, you will notice that there is no deduction from your salary sheet for the employer's contribution.
However, CTC means Cost to Company, which is all-inclusive. In your appointment letter, the company will display the contribution paid from their end, not the amount that will be deducted from your salary as per the statute.
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However, CTC means Cost to Company, which is all-inclusive. In your appointment letter, the company will display the contribution paid from their end, not the amount that will be deducted from your salary as per the statute.
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Dear Heena,
If you are so worried about PF contribution being 24%, why not avoid PF and request them to adjust the same in other components such as basic pay and other allowances. However, you must fall above the PF bracket to fill Form 11.
Usually, companies deduct PF at 24%.
Regards,
Arjun (9224408539)
From India, Mumbai
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If you are so worried about PF contribution being 24%, why not avoid PF and request them to adjust the same in other components such as basic pay and other allowances. However, you must fall above the PF bracket to fill Form 11.
Usually, companies deduct PF at 24%.
Regards,
Arjun (9224408539)
From India, Mumbai
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CTC is Cost to the Company. It includes everything that company pays to an employee, such as employer as well as employee contribution to PF, employer as well as employee contribution to ESI, etc.
From India, Mumbai
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From India, Mumbai
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Dear All,
I would like to outline the contributions and deductions as per the PF Act for each employee and employer, as detailed below on the combined challan:
1. Account No. 1:
- Employee: 12% on Basic
- Employer: 3.67% goes to Provident Fund (PF)
2. Account No. 2:
- Employer: 1.1% deducted as Admin Charges of PF on Basic Wages
3. Account No. 10:
- Employer: 8.33% goes to Employee Pension (EPS)
4. Account No. 21:
- Employer: 0.5% goes to EDLI
5. Account No. 22:
- Employer: 0.01% deducted as Admin Charges of EDLI
Total:
- Employee: 12%
- Employer: 13.61%
This means the total amount of PF contribution is 25.61% from both the employee and employer.
Thank you.
From India, Nasik
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I would like to outline the contributions and deductions as per the PF Act for each employee and employer, as detailed below on the combined challan:
1. Account No. 1:
- Employee: 12% on Basic
- Employer: 3.67% goes to Provident Fund (PF)
2. Account No. 2:
- Employer: 1.1% deducted as Admin Charges of PF on Basic Wages
3. Account No. 10:
- Employer: 8.33% goes to Employee Pension (EPS)
4. Account No. 21:
- Employer: 0.5% goes to EDLI
5. Account No. 22:
- Employer: 0.01% deducted as Admin Charges of EDLI
Total:
- Employee: 12%
- Employer: 13.61%
This means the total amount of PF contribution is 25.61% from both the employee and employer.
Thank you.
From India, Nasik
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Hi friend, please help me. This is the detail of an employee. I have to prepare an Excel sheet for this payroll. It's my assignment. Kindly help me, friends. I tried, but I don't know how to deduct HRA, etc., all the payroll deductions. If you can, please help me. My id is jai.sap(at rate of) yahoocom.
A. Head: 6 to 8 members - CTC is 600,000-800,000.
B. Assistant Manager: 12 members - 400,000-600,000.
C. Engineers: 12 members - 200,000-400,000.
D. Supervisor: 30 members - 100,000-200,000.
E. Unskilled: 20 members - less than 100,000.
Sir, I have done one payroll for A:
Gross salary is 50,000.
Basic: 15,000 (50,000*30/100).
HRA: 10,000 (50,000*20/100).
City Compensation: 15,000 (50,000*30/100).
Conveyance Allowance: 9,600 (800 per month).
Total: 99,600.
Deductions:
ESI Employee: 875 (50,000*1.75%).
ESI Employer: 2,375 (50,000*4.75%).
EPF Employer: 6,000 (50,000*12/100).
EPF Employee: 6,000 (50,000*12/100).
Net Salary: 84,350.
Is this correct, friends? Is this the way we put payroll for individuals?
From India, Karur
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A. Head: 6 to 8 members - CTC is 600,000-800,000.
B. Assistant Manager: 12 members - 400,000-600,000.
C. Engineers: 12 members - 200,000-400,000.
D. Supervisor: 30 members - 100,000-200,000.
E. Unskilled: 20 members - less than 100,000.
Sir, I have done one payroll for A:
Gross salary is 50,000.
Basic: 15,000 (50,000*30/100).
HRA: 10,000 (50,000*20/100).
City Compensation: 15,000 (50,000*30/100).
Conveyance Allowance: 9,600 (800 per month).
Total: 99,600.
Deductions:
ESI Employee: 875 (50,000*1.75%).
ESI Employer: 2,375 (50,000*4.75%).
EPF Employer: 6,000 (50,000*12/100).
EPF Employee: 6,000 (50,000*12/100).
Net Salary: 84,350.
Is this correct, friends? Is this the way we put payroll for individuals?
From India, Karur
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Subject: Re: Ctc
Hi friend, please help me. This is the detail of the employee. I have to prepare an Excel sheet for this payroll. It's my assignment. Kindly help me, friends. I tried, but I don't know how to deduct HRA, etc., all the payroll deductions. If you can, please help me. My id is jai.sap(at rate of) yahoocom.
a. Head 6 to 8 members CTS is 600,000-800,000
b. Assistant manager - 12 members - 400,000-600,000
c. Engineers - 12 members - 200,000-400,000
d. Supervisor - 30 members - 100,000-200,000
e. Unskilled - 20 members - less than 100,000
Sir, I completed one payroll for A:
Gross salary is 50,000
Basic 15,000 (50,000*30/100)
HRA 10,000 (50,000*20/100)
City compensation 15,000 (50,000*30/100)
Conveyance allowance 9,600 (800 per month)
Total: 99,600
Deductions:
ESI employee 875 (50,000*1.75%)
ESI employer 2,375 (50,000*4.75%)
EPF employer 6,000 (50,000*12/100)
EPF employee 6,000 (50,000*12/100)
Net salary is 84,350.
Is this correct, friends? Is this the way we put payroll for individuals?
From India, Karur
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Hi friend, please help me. This is the detail of the employee. I have to prepare an Excel sheet for this payroll. It's my assignment. Kindly help me, friends. I tried, but I don't know how to deduct HRA, etc., all the payroll deductions. If you can, please help me. My id is jai.sap(at rate of) yahoocom.
a. Head 6 to 8 members CTS is 600,000-800,000
b. Assistant manager - 12 members - 400,000-600,000
c. Engineers - 12 members - 200,000-400,000
d. Supervisor - 30 members - 100,000-200,000
e. Unskilled - 20 members - less than 100,000
Sir, I completed one payroll for A:
Gross salary is 50,000
Basic 15,000 (50,000*30/100)
HRA 10,000 (50,000*20/100)
City compensation 15,000 (50,000*30/100)
Conveyance allowance 9,600 (800 per month)
Total: 99,600
Deductions:
ESI employee 875 (50,000*1.75%)
ESI employer 2,375 (50,000*4.75%)
EPF employer 6,000 (50,000*12/100)
EPF employee 6,000 (50,000*12/100)
Net salary is 84,350.
Is this correct, friends? Is this the way we put payroll for individuals?
From India, Karur
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If we look at the global economy, there are several developed countries where pension schemes have failed. For example, the California Public Employees Retirement System. We are also in a state of flux, transitioning from defined benefits to defined contribution due to factors like lack of transparency, infrastructure, etc. In developing countries, returns are higher compared to developed nations. For instance, the metro financing at 4% per annum, which also involves a moratorium until a critical point is reached. Mathematically, administrative charges can be added up, but the premise is faulty or inadequate as we do not account for other costs like IT, telecom, or process costs.
From India, Delhi
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From India, Delhi
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PF not applicable on CTC 18.3.2014.pdf
CTC Calculator with PT, PF and ESIC.xls