Dear Swetha,
It all depends on the employer to deduct both sides of PF from the employee's side or the employer's side. Many companies deduct employee PF from their CTC, and many companies (we can say a good one) deposit both shares from the company's side and give benefits to their employees.
If an employee does not work for six months in a firm, they will only get the PF amount, not the pension amount, which is 8.33%. If they complete six months, they will get the complete amount. After 60 days of resignation, they can submit Form 19 & 10C and withdraw their PF.
Thank you,
Monu Tyagi
From India, Ambala
Acknowledge(0)
Amend(0)
It all depends on the employer to deduct both sides of PF from the employee's side or the employer's side. Many companies deduct employee PF from their CTC, and many companies (we can say a good one) deposit both shares from the company's side and give benefits to their employees.
If an employee does not work for six months in a firm, they will only get the PF amount, not the pension amount, which is 8.33%. If they complete six months, they will get the complete amount. After 60 days of resignation, they can submit Form 19 & 10C and withdraw their PF.
Thank you,
Monu Tyagi
From India, Ambala
Acknowledge(0)Amend(0)
I am not getting into the debate of whether it is legal or illegal. In CTC concept, showing the PF contribution by the employer is actually meant for highlighting to the employee just to show the cost of engaging and the cost incurred by the employer. It may be incorrect to say as PF deduction but PF contribution which the employer is incurring on the employee. CTC has got no guidelines and it is left to the companies to include the components which are directly or indirectly beneficial to the employees including the retiral benefits. Some companies include PF Contribution, some even include Gratuity payable, some include the leave encashments, etc. No standard practice. CTC regime is beyond the limit of min. wages as I understand, probably, just to inflate the costs and present an attractive figure to the employee.
Pon
From India, Lucknow
Acknowledge(0)Amend(0)
616Pon
From India, Lucknow
Acknowledge(0)Amend(0)
Hi Pon,
Yes, what you have stated is absolutely correct. Nowadays, every employer is relying on the concept of CTC. In our Indian companies, there are no restrictions. So, that is the reason why these companies are including attendance bonus, bonus, gratuity, mediclaim, leave encashment, superannuation, etc. The company's motto is to offer the employee as much as they can.
Also, they try to explain that they have exceptionally better beneficial policies. But on the other hand, the employee does not understand that each and every benefit is deducted from his CTC. This sort of mindset has to change.
Regards, Vinay Kumar
From India, Hyderabad
Acknowledge(0)Amend(0)
Yes, what you have stated is absolutely correct. Nowadays, every employer is relying on the concept of CTC. In our Indian companies, there are no restrictions. So, that is the reason why these companies are including attendance bonus, bonus, gratuity, mediclaim, leave encashment, superannuation, etc. The company's motto is to offer the employee as much as they can.
Also, they try to explain that they have exceptionally better beneficial policies. But on the other hand, the employee does not understand that each and every benefit is deducted from his CTC. This sort of mindset has to change.
Regards, Vinay Kumar
From India, Hyderabad
Acknowledge(0)Amend(0)
Dear Friends,
It is my view that Indian Labour Law(s) doesn't recognize CTC. Every piece of Act/Law defines what is Pay, salary, wages, emoluments, and what should/shouldn't be included for every application of PF/ESI/Gratuity/Pension, etc.
I really wonder how any CTC-following employer would satisfy the requirement. I am also interested to know from such companies how their payrolls are drawn with CTC in the back of their mind. Nevertheless, they should necessarily follow a minimum emolument in the form of Basic, DA, CCA, HRA, Conveyance Allowance, Shift Allowance, etc. In short, either they should first fix a lump sum as total remuneration and break it into these groups or first arrive at the breakup and then consolidate to the CTC. In which case, they know the breakup and if so applying them for the purposes of PF etc. shouldn't pose any problem. Am I correct?
It is the duty of every employer to show very clearly what amount is recovered from an employee and what amount is contributed by the Estt. and on what amounts. No one could escape this requirement for the simple reason that there are minimum and maximum amounts which are interest-bearing, and ledger account of every employee should be supplied to the concerned showing monthly breakup of subs, contribution, interest. If these breakups aren't available, how could one regulate Loans, withdrawals, final settlements/transfers/forfeiture, etc.? Am I correct?
Kumar S.
From India, Bangalore
Acknowledge(0)Amend(0)
It is my view that Indian Labour Law(s) doesn't recognize CTC. Every piece of Act/Law defines what is Pay, salary, wages, emoluments, and what should/shouldn't be included for every application of PF/ESI/Gratuity/Pension, etc.
I really wonder how any CTC-following employer would satisfy the requirement. I am also interested to know from such companies how their payrolls are drawn with CTC in the back of their mind. Nevertheless, they should necessarily follow a minimum emolument in the form of Basic, DA, CCA, HRA, Conveyance Allowance, Shift Allowance, etc. In short, either they should first fix a lump sum as total remuneration and break it into these groups or first arrive at the breakup and then consolidate to the CTC. In which case, they know the breakup and if so applying them for the purposes of PF etc. shouldn't pose any problem. Am I correct?
It is the duty of every employer to show very clearly what amount is recovered from an employee and what amount is contributed by the Estt. and on what amounts. No one could escape this requirement for the simple reason that there are minimum and maximum amounts which are interest-bearing, and ledger account of every employee should be supplied to the concerned showing monthly breakup of subs, contribution, interest. If these breakups aren't available, how could one regulate Loans, withdrawals, final settlements/transfers/forfeiture, etc.? Am I correct?
Kumar S.
From India, Bangalore
Acknowledge(0)Amend(0)
Dear Mr. Atul,
You are absolutely right in all your observations. Employees have to be well aware of the components of CTC. In case the breakdown of CTC given along with the offer letter/appointment letter states that the employer's contribution to PF is part of CTC (as it invariably will state), then the employer will deduct contributions towards PF and other obligatory contributions, and the balance will be the take-home pay.
Regards,
Col. Suresh Rathi
From India, Delhi
Acknowledge(0)Amend(0)
You are absolutely right in all your observations. Employees have to be well aware of the components of CTC. In case the breakdown of CTC given along with the offer letter/appointment letter states that the employer's contribution to PF is part of CTC (as it invariably will state), then the employer will deduct contributions towards PF and other obligatory contributions, and the balance will be the take-home pay.
Regards,
Col. Suresh Rathi
From India, Delhi
Acknowledge(0)Amend(0)
Dear Shweta,
For a while, just forget about the CTC concept.
Now, try to understand what the PF Act says about the contributions.
It is absolutely illegal if the employer is deducting both contributions from the monthly gross salary of the employee. It shows that the employer is denying to pay his contributions, and it is a gross default on his side.
So, it is crystal clear that if there is payable gross salary of any employee concerns, whatever mode of payment may be, either monthly/daily, the employee is required to pay his contributions towards PF+FPF, and the employer is also bound to pay his share without fail, intentionally or unintentionally.
If in such a case, the CTC concept applies, the employer just adds his share against PF into the payable amount to the employee for calculation purposes only; however, it cannot be treated as both contributions to be deducted from the employee's gross salary itself.
CTC is a self-explanatory term defined by the employer and does not have any legal confirmations. I think it has cleared your doubts now.
Regards,
Atul S Malve
From India, Sholapur
Acknowledge(0)Amend(0)
For a while, just forget about the CTC concept.
Now, try to understand what the PF Act says about the contributions.
It is absolutely illegal if the employer is deducting both contributions from the monthly gross salary of the employee. It shows that the employer is denying to pay his contributions, and it is a gross default on his side.
So, it is crystal clear that if there is payable gross salary of any employee concerns, whatever mode of payment may be, either monthly/daily, the employee is required to pay his contributions towards PF+FPF, and the employer is also bound to pay his share without fail, intentionally or unintentionally.
If in such a case, the CTC concept applies, the employer just adds his share against PF into the payable amount to the employee for calculation purposes only; however, it cannot be treated as both contributions to be deducted from the employee's gross salary itself.
CTC is a self-explanatory term defined by the employer and does not have any legal confirmations. I think it has cleared your doubts now.
Regards,
Atul S Malve
From India, Sholapur
Acknowledge(0)Amend(0)
Dear Swetha,
Referring to your query, the contributions for employees and employers shall not be deducted from the employee's salary by the employer. In the CTC pattern, the employer can show the part of the employer's contribution.
Regards,
V R RAO PULIPAKA
From India, Bangalore
Acknowledge(0)Amend(0)
Referring to your query, the contributions for employees and employers shall not be deducted from the employee's salary by the employer. In the CTC pattern, the employer can show the part of the employer's contribution.
Regards,
V R RAO PULIPAKA
From India, Bangalore
Acknowledge(0)Amend(0)
Dear Swetha,
I agree with Atul. The statement you are making in your last post, "I got a clarification that it is legal to deduct both employee and employer contributions for PF from the employee's salary," is a little confusing. Basically, if PF is deducted from the employee (i.e., 12%), the employer contributes the same ratio along with administrative and EDLI charges.
Just to add, it is also optional to deduct PF. So, if any employee does not want to contribute to PF, we as HR must consider the same.
Regards, Tanuja
From India, Pune
Acknowledge(0)Amend(0)
I agree with Atul. The statement you are making in your last post, "I got a clarification that it is legal to deduct both employee and employer contributions for PF from the employee's salary," is a little confusing. Basically, if PF is deducted from the employee (i.e., 12%), the employer contributes the same ratio along with administrative and EDLI charges.
Just to add, it is also optional to deduct PF. So, if any employee does not want to contribute to PF, we as HR must consider the same.
Regards, Tanuja
From India, Pune
Acknowledge(0)Amend(0)
It is right that employer cotribution of PF to duduct with employee salary if employer show your CTC.Because in ctc we add all amount
From India, Delhi
Acknowledge(0)Amend(0)
From India, Delhi
Acknowledge(0)Amend(0)
Dear Swetha,
Regarding the deduction of the employer's share from an employee's salary, the practice is considered a malpractice both morally and legally. I agree with the statements made by Nitin and Atul Malve. If an employee is receiving a fair salary that allows the employer to deduct the employer's share as part of the so-called CTC, then it can be considered.
Regards,
Kiran Kale
From India, Kolhapur
Acknowledge(0)Amend(0)
Regarding the deduction of the employer's share from an employee's salary, the practice is considered a malpractice both morally and legally. I agree with the statements made by Nitin and Atul Malve. If an employee is receiving a fair salary that allows the employer to deduct the employer's share as part of the so-called CTC, then it can be considered.
Regards,
Kiran Kale
From India, Kolhapur
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Employer-PF-res trict to wages of Rs 6500.pdf