I joined this company about a year ago with the help of a reference. They gave me an offer letter stating my salary would be 20k, out of which 17500 would be in hand, and the rest would be for taxes and PF.
This was my first experience with PF deductions, and I had no prior knowledge about tax and PF deductions. I request you to review the reference screenshot of my offer letter for the details mentioned.
All this time, I assumed the company was deducting 2500, with at least 2000 being deposited into my PF account from my side and 2000 from the employer's side. However, upon careful inspection of my salary bifurcation, it appears they are only depositing 960 into my PF account. Hence, my first question is, where is the remaining 1000 being deducted?
Assuming the 960 is being deposited as PF contribution, why am I receiving only approximately 300 from the employer's side?
My estimated annual savings were calculated as follows:
Employee contribution: 2000
Employer contribution: 2000 x 12 = 24000
Total deduction: 2500 x 12 = 30000
What I am actually receiving is 15500, which can be confirmed by reviewing my PF passbook attachment.
Thank you for your attention and response.
From India, Mumbai
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This was my first experience with PF deductions, and I had no prior knowledge about tax and PF deductions. I request you to review the reference screenshot of my offer letter for the details mentioned.
All this time, I assumed the company was deducting 2500, with at least 2000 being deposited into my PF account from my side and 2000 from the employer's side. However, upon careful inspection of my salary bifurcation, it appears they are only depositing 960 into my PF account. Hence, my first question is, where is the remaining 1000 being deducted?
Assuming the 960 is being deposited as PF contribution, why am I receiving only approximately 300 from the employer's side?
My estimated annual savings were calculated as follows:
Employee contribution: 2000
Employer contribution: 2000 x 12 = 24000
Total deduction: 2500 x 12 = 30000
What I am actually receiving is 15500, which can be confirmed by reviewing my PF passbook attachment.
Thank you for your attention and response.
From India, Mumbai
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With reference to your salary bifurcation, your fixed gross salary is 18655, which was set by your employer. Including your employer's EPF contribution (960) and gratuity (385), it amounts to 20000. Deducting your EPF contribution of 960 (8000*12%), you should receive 17695.
EPF is a social security benefit that every employer must ensure they provide to their employees as per norms. No tax is deducted from your salary since your annual salary of 18655 * 12 is below the income tax threshold.
From India, Madras
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2EPF is a social security benefit that every employer must ensure they provide to their employees as per norms. No tax is deducted from your salary since your annual salary of 18655 * 12 is below the income tax threshold.
From India, Madras
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Dear Sepreta,
First of all welcome to the community which is based on “Sharing and Learning” basis.
This is your very first discussion, I would appreciate the way you have explained your query. You have not only provided the detailed data but also attached relevant doc. to clarify your points. Here most new comers post there query in very casual approach with lot of short forms (like typing any social media message). Very few explained there query in proper way.
Now come to your points. You have mentioned “salary will be 20k in which 17500 will be in hand”. Let me explain you, the “Salary” here means your total CTC, which will include your monthly salary and employer’s other exp. towards your employment in the company. Employee always get monthly salary after making needful deductions. We never get the CTC. As stated by fellow member your in hand salary should be 17695 (Gross salary – EPF, 18655-960). There may be some other deduction/s on account of Professional Tax, Labour Welfare Fund (which may be applicable in your state). May be you are getting Rs. 17500/- after those deductions, or otherwise we can say the 17500/- was told as round off figure.
Your main concern is for EPF Calculation. Your assumption that the company is deducting Rs. 2500/- or depositing at least Rs. 2000/- is incorrect. When clearly Rs. 960 is mentioned in your offer letter how it can be 2500/- or 2000/-. Pls note once again 20k is your CTC not salary. Don't assume that your PF deduction should be Rs. 2500 (20000-17500). It is 960/pm as given in offer letter and PF passbook as well. So I think, your 1st doubt of other 1000/- is cleared now.
However, on going through the attachment I have noticed your company initially deducted and deposited Rs 960 (which is absolutely correct as per the offer letter). But later the company has deducted and deposited higher PF. May be later some salary corrections done. In Maharashtra, DA is also a compulsory part of Wages Structure (which is not shown in your letter). May be later DA component included/adjusted in your pay structure and PF is deducted and deposited on DA as well.
The Employer PF is further divided into two parts (Pension Fund and Employer PF). For your knowledge out of employer 12% contribution, 8.33% of Basic+DA (subject to maximum Rs. 1250) is deposited under “Pension Fund” & the rest deposited into Employer PF Contribution. You can see the total of “Employer contribution” and “Pension Fund” is equals of Employee Share (5402+2381=7783). So don't think less Employer contribution is deposited.
So, as of now your salary, PF (employer contribution) all are fine.
Hope I have clarified your points to your satisfaction.
From India, Delhi
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First of all welcome to the community which is based on “Sharing and Learning” basis.
This is your very first discussion, I would appreciate the way you have explained your query. You have not only provided the detailed data but also attached relevant doc. to clarify your points. Here most new comers post there query in very casual approach with lot of short forms (like typing any social media message). Very few explained there query in proper way.
Now come to your points. You have mentioned “salary will be 20k in which 17500 will be in hand”. Let me explain you, the “Salary” here means your total CTC, which will include your monthly salary and employer’s other exp. towards your employment in the company. Employee always get monthly salary after making needful deductions. We never get the CTC. As stated by fellow member your in hand salary should be 17695 (Gross salary – EPF, 18655-960). There may be some other deduction/s on account of Professional Tax, Labour Welfare Fund (which may be applicable in your state). May be you are getting Rs. 17500/- after those deductions, or otherwise we can say the 17500/- was told as round off figure.
Your main concern is for EPF Calculation. Your assumption that the company is deducting Rs. 2500/- or depositing at least Rs. 2000/- is incorrect. When clearly Rs. 960 is mentioned in your offer letter how it can be 2500/- or 2000/-. Pls note once again 20k is your CTC not salary. Don't assume that your PF deduction should be Rs. 2500 (20000-17500). It is 960/pm as given in offer letter and PF passbook as well. So I think, your 1st doubt of other 1000/- is cleared now.
However, on going through the attachment I have noticed your company initially deducted and deposited Rs 960 (which is absolutely correct as per the offer letter). But later the company has deducted and deposited higher PF. May be later some salary corrections done. In Maharashtra, DA is also a compulsory part of Wages Structure (which is not shown in your letter). May be later DA component included/adjusted in your pay structure and PF is deducted and deposited on DA as well.
The Employer PF is further divided into two parts (Pension Fund and Employer PF). For your knowledge out of employer 12% contribution, 8.33% of Basic+DA (subject to maximum Rs. 1250) is deposited under “Pension Fund” & the rest deposited into Employer PF Contribution. You can see the total of “Employer contribution” and “Pension Fund” is equals of Employee Share (5402+2381=7783). So don't think less Employer contribution is deposited.
So, as of now your salary, PF (employer contribution) all are fine.
Hope I have clarified your points to your satisfaction.
From India, Delhi
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Hi Sepreta,
With reference to your salary bifurcation, your fixed CTC salary is 20,000, which was set by your employer.
- BASIC: 8,000
- HRA: 4,000
- CONV.: 1,600
- MEDICAL ALL.: 1,250
- SPEA. ALL.: 3,805
- GROSS: 18,655
Deductions:
- Employee's share in PF = 12% on basic = 960
- Employer's share in PF (before April 2017) = 13.36% on basic = 1,069 (deducted from your gross salary)
- Gratuity (4.81% on basic) = 385
- LWF (deducted from your gross salary) = 48 (36 Employer's share and 12 employee's share) in Mumbai
IN HAND: 17,538
Hope this helps you!
From India, Gurgaon
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With reference to your salary bifurcation, your fixed CTC salary is 20,000, which was set by your employer.
- BASIC: 8,000
- HRA: 4,000
- CONV.: 1,600
- MEDICAL ALL.: 1,250
- SPEA. ALL.: 3,805
- GROSS: 18,655
Deductions:
- Employee's share in PF = 12% on basic = 960
- Employer's share in PF (before April 2017) = 13.36% on basic = 1,069 (deducted from your gross salary)
- Gratuity (4.81% on basic) = 385
- LWF (deducted from your gross salary) = 48 (36 Employer's share and 12 employee's share) in Mumbai
IN HAND: 17,538
Hope this helps you!
From India, Gurgaon
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Salary-Note.doc
SALARY SHEET CALCULATION.xls