Dear Sir/Madam,
Good Day.
Iam working in a small scale IT company located in Chennai as an Asst.Manager-Human Resources. Here in my company the way the salary has been calculated looks suspicious to me. Because, when I new employee is joining in my company we will ask for his previous CTC and we will increase some 20% to 30% in his previous CTC and offer him. Like if his previous CTC is 200000 then we will offer him 2,40,000 with 20% of hike.
But when it comes to the PF part. The actual commitment is employee needs to contribute 6% and employer needs to contribute 6%. Like, the employee who got an offer for 2,40,000 will have a deduction of 12% PF in his monthly salary of 20,000 by deducting 6% (1200) and employer contribution 6% (1200) as a total of 2400 Rs every month.
So, my doubt is whether the employee will get a take home of 18,800 or 17,600. Because if the employer is contributing 6% in the PF then the total monthly package of the employee is 20,000 + 1200. Or the employer can deduct the 12% in the salary of 20,000 of the employee and provide him 17,600 as a take home.
The main Question is if it an employer contribution, then why the employer is deducting the 6% from the employee's salary itself.
When I have asked this question they have given me an answer saying, "this is all included inside your 20,000 itself and we will deduct the employer's contribution from your salary only. Because PF is anyway your money. So, you have to go with that. We have only committed CTC. not take home or otherwise"
I am literally very much confused. Kindly let me know who is right?
Thanks for reading my message.
Thanks and Regards,
Vikna Prakash.S (Asst-Manager)
From India, Madras
Good Day.
Iam working in a small scale IT company located in Chennai as an Asst.Manager-Human Resources. Here in my company the way the salary has been calculated looks suspicious to me. Because, when I new employee is joining in my company we will ask for his previous CTC and we will increase some 20% to 30% in his previous CTC and offer him. Like if his previous CTC is 200000 then we will offer him 2,40,000 with 20% of hike.
But when it comes to the PF part. The actual commitment is employee needs to contribute 6% and employer needs to contribute 6%. Like, the employee who got an offer for 2,40,000 will have a deduction of 12% PF in his monthly salary of 20,000 by deducting 6% (1200) and employer contribution 6% (1200) as a total of 2400 Rs every month.
So, my doubt is whether the employee will get a take home of 18,800 or 17,600. Because if the employer is contributing 6% in the PF then the total monthly package of the employee is 20,000 + 1200. Or the employer can deduct the 12% in the salary of 20,000 of the employee and provide him 17,600 as a take home.
The main Question is if it an employer contribution, then why the employer is deducting the 6% from the employee's salary itself.
When I have asked this question they have given me an answer saying, "this is all included inside your 20,000 itself and we will deduct the employer's contribution from your salary only. Because PF is anyway your money. So, you have to go with that. We have only committed CTC. not take home or otherwise"
I am literally very much confused. Kindly let me know who is right?
Thanks for reading my message.
Thanks and Regards,
Vikna Prakash.S (Asst-Manager)
From India, Madras
Dear Vikna
Both the employer and the employee contribute 12% each for PF (not 6%)
The full 12% of the employee gets deposited in the account. Out of The 12% of the employer 8.33% gets deposited in EDLI, 6.66% in PF. Over and above this 1.67% service charges are also paid by the employer
As per the PF Act, an organisation only needs to contribute to PF upto 6500. after this amount is crossed, it is possible not to contribute. the company can structure the package where the full 24% is being paid by the employee. but normally to ensure goodwill this is not done
So this should be communicated to the employee to prevent any negative feelings
Regards
Annika
From India, Gurgaon
1Both the employer and the employee contribute 12% each for PF (not 6%)
The full 12% of the employee gets deposited in the account. Out of The 12% of the employer 8.33% gets deposited in EDLI, 6.66% in PF. Over and above this 1.67% service charges are also paid by the employer
As per the PF Act, an organisation only needs to contribute to PF upto 6500. after this amount is crossed, it is possible not to contribute. the company can structure the package where the full 24% is being paid by the employee. but normally to ensure goodwill this is not done
So this should be communicated to the employee to prevent any negative feelings
Regards
Annika
From India, Gurgaon
Dear All,
Your EPF contribution depends upon your (Basic+DA+Cash value of food concession).
Generally contribution is 12% for employee and employer and 10% in case of sick industry.
Out of employer contribution 8.33% or maximum of Rs541 is contributed towards EPS and 3.67% or rest is paid to EPF.
1.61% is paid by employer for Admin charge which includes (EDLI, Admin EDLI and Admin EPF).
CTC of an employee include total amount which employer will spend for him/her.
Hope this is clear.
Regard's
Shaikh
From India, Bhubaneswar
Your EPF contribution depends upon your (Basic+DA+Cash value of food concession).
Generally contribution is 12% for employee and employer and 10% in case of sick industry.
Out of employer contribution 8.33% or maximum of Rs541 is contributed towards EPS and 3.67% or rest is paid to EPF.
1.61% is paid by employer for Admin charge which includes (EDLI, Admin EDLI and Admin EPF).
CTC of an employee include total amount which employer will spend for him/her.
Hope this is clear.
Regard's
Shaikh
From India, Bhubaneswar
Dear All,
For salary (Basic+DA+Cash value of food concession) upto Rs6500, EPF contribution is mandatory if your establishment is covered under EPF act.
If it’s more than Rs6500, then it may or may not be exempted upon the mutual consent of employee and employer.
Regard's
Shaikh
From India, Bhubaneswar
For salary (Basic+DA+Cash value of food concession) upto Rs6500, EPF contribution is mandatory if your establishment is covered under EPF act.
If it’s more than Rs6500, then it may or may not be exempted upon the mutual consent of employee and employer.
Regard's
Shaikh
From India, Bhubaneswar
Dear Sir if any employee basic salary is Rs.10000 then how can calculate PF and how much amount employer can contribute to him and how much employee can contribute
From India, Delhi
From India, Delhi
Dear Pawan,
If you will contribute from Rs10000 then as follows:-
Employee contribution
Rs10000*12%=Rs1200 (EPF Account)
Employer Contribution
Rs1000*8.33% (or maximum fo Rs541)=Rs833 as it is higher it will taken as Rs541 (EPS Account)
Rs1000*3.67% (Rs833-Rs541)=Rs659 (EPF Account)
If you will contribute on Rs6500 then same will follow.
Regard's
Shaikh
From India, Bhubaneswar
If you will contribute from Rs10000 then as follows:-
Employee contribution
Rs10000*12%=Rs1200 (EPF Account)
Employer Contribution
Rs1000*8.33% (or maximum fo Rs541)=Rs833 as it is higher it will taken as Rs541 (EPS Account)
Rs1000*3.67% (Rs833-Rs541)=Rs659 (EPF Account)
If you will contribute on Rs6500 then same will follow.
Regard's
Shaikh
From India, Bhubaneswar
Hi Vikna Prakash
CTC means cost to company it includs any exepnditue incured by company on the employee it can be monthly or yearly.
As per PF is concerned both the employee as well as employer has to contribute 12% of the (BASIC+DA), and not the 6%.
Suppose you are getting RS.100 than(Rs12+Rs12) total Rs.24
out of this Rs.24 the Rs.12 of the employer can be included in your CTC.
REGARDS
naresh
From India, Pune
CTC means cost to company it includs any exepnditue incured by company on the employee it can be monthly or yearly.
As per PF is concerned both the employee as well as employer has to contribute 12% of the (BASIC+DA), and not the 6%.
Suppose you are getting RS.100 than(Rs12+Rs12) total Rs.24
out of this Rs.24 the Rs.12 of the employer can be included in your CTC.
REGARDS
naresh
From India, Pune
Subjet: Contribution of EPF regarding
Dear All
For salary/wages (Basic+D.A) P.F contributiion @ 12% each from employee & employer. Apart from that 1.61% charges payable by the employer (i.e .5% EdLI & 1.1% and .01% goes to admin charges and inspection charges respectivly). Most important thing is Employer's contribution should not deducted from the employee's salary. Since provident fund is a social welfare measures provided to the employees by the Government of India.
The celing limit is Rs.6500/-
From India, Coimbatore
Dear All
For salary/wages (Basic+D.A) P.F contributiion @ 12% each from employee & employer. Apart from that 1.61% charges payable by the employer (i.e .5% EdLI & 1.1% and .01% goes to admin charges and inspection charges respectivly). Most important thing is Employer's contribution should not deducted from the employee's salary. Since provident fund is a social welfare measures provided to the employees by the Government of India.
The celing limit is Rs.6500/-
From India, Coimbatore
Dear Friends
Many of us have written about PF contribution. But the important aspect is how CTC deceives a new recruit. In many companies, CTC includes employer contribution to PF, gratuity, leave encashment, transportation, staff welfare (Tea/coffee provided in the office) etc., etc., So the candidate is very impressed with big fat CTC but what he takes home is nothing but pea nut. All colleagues in HR should see that CTC should not be used as a tool to mislead the new recruits.
Regards
Bhavan
From India, Bangalore
Many of us have written about PF contribution. But the important aspect is how CTC deceives a new recruit. In many companies, CTC includes employer contribution to PF, gratuity, leave encashment, transportation, staff welfare (Tea/coffee provided in the office) etc., etc., So the candidate is very impressed with big fat CTC but what he takes home is nothing but pea nut. All colleagues in HR should see that CTC should not be used as a tool to mislead the new recruits.
Regards
Bhavan
From India, Bangalore
Dear Pawan,
If its more than Rs6500 then its optional you may or not but in mutual agreement.
Dear Bhavan,
During the salary negotiation Salary Annexure is given to employee which shows all earning,deduction,gross,ctc,net and many more.
If an employee agrees to work for peanut, I don't think is a fault of HR. Hope you get it and take in a constructive way.
Regard's
Shaikh
From India, Bhubaneswar
If its more than Rs6500 then its optional you may or not but in mutual agreement.
Dear Bhavan,
During the salary negotiation Salary Annexure is given to employee which shows all earning,deduction,gross,ctc,net and many more.
If an employee agrees to work for peanut, I don't think is a fault of HR. Hope you get it and take in a constructive way.
Regard's
Shaikh
From India, Bhubaneswar
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Provident fund.zip
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