Dear All,
Can any employer deduct/remmit the 24% amount of PF from an employee's CTC?
For example, in an appointment letter, the monthly CTC is Rs. 15,500. However, in the offer letter, the CTC is detailed as follows:
- Basic: 12000
- HRA: 2060
- Gross Salary (A): 14060
- Company's PF Contribution: 1440
- Total Deferred Benefits (B): 1440
- Total CTC (A+B)=C: 15500
I kindly request your assistance on this matter.
Thanks & Regards,
From India, Ahmedabad
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1Can any employer deduct/remmit the 24% amount of PF from an employee's CTC?
For example, in an appointment letter, the monthly CTC is Rs. 15,500. However, in the offer letter, the CTC is detailed as follows:
- Basic: 12000
- HRA: 2060
- Gross Salary (A): 14060
- Company's PF Contribution: 1440
- Total Deferred Benefits (B): 1440
- Total CTC (A+B)=C: 15500
I kindly request your assistance on this matter.
Thanks & Regards,
From India, Ahmedabad
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Yes ... CTC is cost to the company and yes employers contribution is the cost borne by the company so it is right.
From India, Pune
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From India, Pune
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Hi,
The entire PF cannot be deducted from the employee.( Only his 12% will be deducted from his salary)
An employer is obligated by law to pay his part of the contribution.
As per Paras 31 of the Employees Provident Fund Scheme 1952 the Employer’s share not to be deducted from the members. (Attached).
A CTC of any employee is not related with PF contributions.
A CTC is the sum total of the below:The below is a generic description
• Fixed pay which includes his basic , DA, Conveyance etc
• Employers contribution to PF, Gratuity ,Supperannuation
• Variable Pay : Based on performance /target achievement
• Any Perquisite or Benefits
From India, Mumbai
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The entire PF cannot be deducted from the employee.( Only his 12% will be deducted from his salary)
An employer is obligated by law to pay his part of the contribution.
As per Paras 31 of the Employees Provident Fund Scheme 1952 the Employer’s share not to be deducted from the members. (Attached).
A CTC of any employee is not related with PF contributions.
A CTC is the sum total of the below:The below is a generic description
• Fixed pay which includes his basic , DA, Conveyance etc
• Employers contribution to PF, Gratuity ,Supperannuation
• Variable Pay : Based on performance /target achievement
• Any Perquisite or Benefits
From India, Mumbai
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Dear Shweta,
Thanks for the update.
For the above case, my employer has deducted 24% of the PF amount from my CTC, i.e., 12% from my side and 12% from the employer's side. During the joining formalities, I signed the offer letter and appointment letter as per the given CTC. Now, after a tenure of 1.09 years, I have resigned from that company. Can I claim the amount that was deducted from my CTC? I request you to please guide me on the proper legal action.
Thanks,
From India, Ahmedabad
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Thanks for the update.
For the above case, my employer has deducted 24% of the PF amount from my CTC, i.e., 12% from my side and 12% from the employer's side. During the joining formalities, I signed the offer letter and appointment letter as per the given CTC. Now, after a tenure of 1.09 years, I have resigned from that company. Can I claim the amount that was deducted from my CTC? I request you to please guide me on the proper legal action.
Thanks,
From India, Ahmedabad
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Dear All,
There is always confusion about CTC and Monthly gross. CTC has no legal standing; rather, it is the company's internal matter to arrive at each employee's actual cost. However, the monthly gross is your monthly salary. In this case, the monthly gross is INR 14060/-, and after deductions of the employee's contributions to PF, PTAX, & ESI, if any, the employee will receive the net monthly salary.
CTC encompasses all related costs (which may vary from organization to organization) for any employee during their employment. In this case, the payslip should display the Earning side - Basic & HRA, and on the Deduction side, Employee contributions to PF, ESI, PTAX, etc. Naturally, the net salary will be less than the monthly gross, which has no direct relation to the monthly CTC.
Thanks & Regards,
S K Bandyopadhyay
USD HR Solutions
From India, New Delhi
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There is always confusion about CTC and Monthly gross. CTC has no legal standing; rather, it is the company's internal matter to arrive at each employee's actual cost. However, the monthly gross is your monthly salary. In this case, the monthly gross is INR 14060/-, and after deductions of the employee's contributions to PF, PTAX, & ESI, if any, the employee will receive the net monthly salary.
CTC encompasses all related costs (which may vary from organization to organization) for any employee during their employment. In this case, the payslip should display the Earning side - Basic & HRA, and on the Deduction side, Employee contributions to PF, ESI, PTAX, etc. Naturally, the net salary will be less than the monthly gross, which has no direct relation to the monthly CTC.
Thanks & Regards,
S K Bandyopadhyay
USD HR Solutions
From India, New Delhi
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PF is not deducted on your CTC.
Your employer PF contribution is merely mentioned in your CTC letter.
PF rules are governed by government rules and not by CTC letter.
E.g some employers even show Gratuity in their CTC letter.
• So when an employee joins his offer letter shows gratuity. But if he leaves within a year, he resigns not gratuity as he has not completed 5 years. He does not get the gratuity irrespective of the fact it is mentioned in the CTC letter.
If your employer has contributed his part of the PF and complied with all statutory obligations.
, then you can withdraw PF as per the normal process subject to conditions. You do not require any legal action.
If it is not the case then you need to first find out exactly who paid how much contribution and then accordingly decide. Visit EPF website and see the PF passbook. You will get the details of PF deductions from your salary and also the contribution from your employer.
PF in principal is required to be transferred to the new company when a employee resign from the old company. To make PF withdrawal process stringent, the government introduced UAN where multiple PF can be tracked under a single UAN.
So if you are unemployed for more than two months or you are employed in a company where there is no PF(as per laws) then contact your company HR and initiate the PF withdrawal process.
From India, Mumbai
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Your employer PF contribution is merely mentioned in your CTC letter.
PF rules are governed by government rules and not by CTC letter.
E.g some employers even show Gratuity in their CTC letter.
• So when an employee joins his offer letter shows gratuity. But if he leaves within a year, he resigns not gratuity as he has not completed 5 years. He does not get the gratuity irrespective of the fact it is mentioned in the CTC letter.
If your employer has contributed his part of the PF and complied with all statutory obligations.
, then you can withdraw PF as per the normal process subject to conditions. You do not require any legal action.
If it is not the case then you need to first find out exactly who paid how much contribution and then accordingly decide. Visit EPF website and see the PF passbook. You will get the details of PF deductions from your salary and also the contribution from your employer.
PF in principal is required to be transferred to the new company when a employee resign from the old company. To make PF withdrawal process stringent, the government introduced UAN where multiple PF can be tracked under a single UAN.
So if you are unemployed for more than two months or you are employed in a company where there is no PF(as per laws) then contact your company HR and initiate the PF withdrawal process.
From India, Mumbai
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Dear Shweta Nair,
I think you didn't understand the question properly, but you provided an answer. Anyways, it's not about deducting PF on CTC; it's about showing it as a cost to the company. The employer is not deducting the employer's share of PF from the employee's gross salary, but it is shown as a cost borne by the company. Please understand the question first.
Also, the employer's share of PF is shown in the appointment letter as a cost incurred, which is correct.
From India, Pune
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I think you didn't understand the question properly, but you provided an answer. Anyways, it's not about deducting PF on CTC; it's about showing it as a cost to the company. The employer is not deducting the employer's share of PF from the employee's gross salary, but it is shown as a cost borne by the company. Please understand the question first.
Also, the employer's share of PF is shown in the appointment letter as a cost incurred, which is correct.
From India, Pune
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Dear Chirag, No, there is nothing to claim. Also no need for legal action.
From India, Pune
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From India, Pune
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Chirag,
In simple language, anything above the Minimum Wages, the company can include any allowances, perquisites, etc., in your CTC. Employer's contributions regarding your ESI, PF, LWF, Gratuity, Leave, Bonus will not reflect in your salary slip. However, it will be shown in your appointment letter or in an Annexure to your appointment letter. Legally, the company will only show a 12% PF deduction through your salary, and the remaining 12% (employer's share) will be remitted to PF authorities along with your monthly PF contribution.
If your company had paid you a Basic salary of Rs. 15,500/- from your joining date, you would have become an excluded employee from PF Membership, and there would not have been any PF deduction from your salary. There was an option for you to deposit 24% of the amount in your own recurring account. However, putting the amount in the PF account is always beneficial as you earn interest on a pro rata basis and it is exempted under section 80C of the Income Tax Act.
So, look for a better opportunity elsewhere at a suitable time.
From India, Thane
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In simple language, anything above the Minimum Wages, the company can include any allowances, perquisites, etc., in your CTC. Employer's contributions regarding your ESI, PF, LWF, Gratuity, Leave, Bonus will not reflect in your salary slip. However, it will be shown in your appointment letter or in an Annexure to your appointment letter. Legally, the company will only show a 12% PF deduction through your salary, and the remaining 12% (employer's share) will be remitted to PF authorities along with your monthly PF contribution.
If your company had paid you a Basic salary of Rs. 15,500/- from your joining date, you would have become an excluded employee from PF Membership, and there would not have been any PF deduction from your salary. There was an option for you to deposit 24% of the amount in your own recurring account. However, putting the amount in the PF account is always beneficial as you earn interest on a pro rata basis and it is exempted under section 80C of the Income Tax Act.
So, look for a better opportunity elsewhere at a suitable time.
From India, Thane
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