Hello All,
I have one query regarding provident fund deduction. As per the rules of the Provident Fund, the contribution is supposed to be 12% from both the Employee and the Employer, based on the basic salary. Is there a rule that permits the Employer to deduct both amounts from the employee's salary?
I am working in an IT software Pvt Ltd company as an HR. We are supposed to begin deducting the provident fund, but the boss insists that both the employee and employer contributions will be deducted from the employee's salary. Can anyone please help me understand the rules of Provident Funds?
Thanks,
Himani
From India, Rajkot
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1I have one query regarding provident fund deduction. As per the rules of the Provident Fund, the contribution is supposed to be 12% from both the Employee and the Employer, based on the basic salary. Is there a rule that permits the Employer to deduct both amounts from the employee's salary?
I am working in an IT software Pvt Ltd company as an HR. We are supposed to begin deducting the provident fund, but the boss insists that both the employee and employer contributions will be deducted from the employee's salary. Can anyone please help me understand the rules of Provident Funds?
Thanks,
Himani
From India, Rajkot
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Himani, The answer to your query is a big NO. It is startling to know that many Co is having HR without any basic knowledge of labor laws. Varghese Mathew
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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Hello Varghese,
You are right. Actually, I have the basic knowledge that we learned in our education regarding this issue. I have informed my boss that it may not be possible, but he insists that it is working. I just want to understand the situation better.
From India, Rajkot
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You are right. Actually, I have the basic knowledge that we learned in our education regarding this issue. I have informed my boss that it may not be possible, but he insists that it is working. I just want to understand the situation better.
From India, Rajkot
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Dear Himani,
Warm greetings!
You have issued an Appointment letter to the Employee. In this, the salary part has been mentioned. In the CTC, you have included the PF component, which is 12% of Basic Pay for EPF. Out of this, 12% of Basic Pay, of which 8.33% or Rs. 541, whichever is less, is to be deposited. The remainder will also need to be deposited along with 12%. Hence, it has to be deducted from the Employee's Salary only.
CTC means Gross salary + Expenses incurred by the Employer on behalf of the Employee.
Please let me know if you need any further information in this regard.
Warm regards,
Pranab Chakraborty
9404384433
From India, Mumbai
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Warm greetings!
You have issued an Appointment letter to the Employee. In this, the salary part has been mentioned. In the CTC, you have included the PF component, which is 12% of Basic Pay for EPF. Out of this, 12% of Basic Pay, of which 8.33% or Rs. 541, whichever is less, is to be deposited. The remainder will also need to be deposited along with 12%. Hence, it has to be deducted from the Employee's Salary only.
CTC means Gross salary + Expenses incurred by the Employer on behalf of the Employee.
Please let me know if you need any further information in this regard.
Warm regards,
Pranab Chakraborty
9404384433
From India, Mumbai
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(Fact Check Failed/Partial)-The user's reply is [B]incorrect[/B].
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Mr Himani, It is good to know that you have basic knowledge.Then show para 31 & 76 of the Employees Provident Fund Scheme to your boss . Varghese Mathew
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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(Fact Check Failed/Partial)-The user's reply is partially correct. Referring to para 31 & 76 of the Employees' Provident Fund Scheme is a good step. However, the boss cannot deduct both employee and employer contributions from the employee's salary as per the law.
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Hi, If your company is following the CTC concept, then it is correct; else, it is absolutely wrong.
CTC = Gross Salary (Basic Salary + DA + Allowances) + Employer Contribution of PF + Employer Contribution to ESI + Annual Benefits (LTA, Medical Reimbursement, Bonus, Fixed Incentive), etc.
PF should be calculated on Basic Salary + DA, subject to a maximum of Rs. 6500/- or basic salary, whichever is less. (This limit can be extended at the discretion of the Company/Management).
Hence, the PF contribution from the Employee is: 6500 x 12% = 780. Employer Contribution is: 6500 x 8.33% = 541 + 6500 x 3.67% = 237 (Total of 780).
From India, Bangalore
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CTC = Gross Salary (Basic Salary + DA + Allowances) + Employer Contribution of PF + Employer Contribution to ESI + Annual Benefits (LTA, Medical Reimbursement, Bonus, Fixed Incentive), etc.
PF should be calculated on Basic Salary + DA, subject to a maximum of Rs. 6500/- or basic salary, whichever is less. (This limit can be extended at the discretion of the Company/Management).
Hence, the PF contribution from the Employee is: 6500 x 12% = 780. Employer Contribution is: 6500 x 8.33% = 541 + 6500 x 3.67% = 237 (Total of 780).
From India, Bangalore
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(Fact Check Failed/Partial)-The user's reply is mostly correct, but there is a slight inaccuracy in the calculation of the employer's contribution to PF. The correct employer contribution to PF is 12% of the basic salary, not 8.33% and 3.67% separately.
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Praban ji & Beem ji,
CTC means Cost To the Company i.e exps that are incurred by the Co. for the e.ee… isn’t it ? When e.er contbn is shown in the CTC why shud the e.ee pay it ??? or if the employee is paying it how can it appear under CTC…? isn't that cheating ?
From United Arab Emirates
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CTC means Cost To the Company i.e exps that are incurred by the Co. for the e.ee… isn’t it ? When e.er contbn is shown in the CTC why shud the e.ee pay it ??? or if the employee is paying it how can it appear under CTC…? isn't that cheating ?
From United Arab Emirates
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(Fact Check Failed/Partial)-The user reply contains inaccuracies. The employer's contribution to provident fund can be part of the CTC, and it doesn't mean the employee pays it. The employee's contribution is separate and cannot be deducted from their salary.
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If employer and employee contributions are to be borne by employees alone, then it is totally against the statutory provisions under the EPF & MP Act, 1952. I suggest you conduct a study or class about this Act with your boss and discuss the impact of the current practices followed by your establishment regarding this issue.
Thanks,
R K Nair
From India, Aizawl
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Thanks,
R K Nair
From India, Aizawl
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(Fact Checked)-The user reply is correct. It aligns with the statutory provisions under the EPF & MP Act, 1952 where both employer and employee contributions cannot be solely borne by the employees. (1 Acknowledge point)
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(Fact Check Failed/Partial)-The user reply is incorrect. The employer cannot deduct both the employee's and employer's provident fund contributions from the employee's salary. The correct practice is for the employer to contribute an additional 12% on top of the employee's contribution. It is a violation of labor laws to deduct both amounts from the employee's salary.