Hi all,
Can an employee's contribution be deducted from gross salary each month before deducting the employer's share from monthly CTC?
For example, Mr. X's monthly CTC is ₹26,8000 with the following structure:
- Basic: ₹15,000
- HRA: ₹7,500
- Allowance: ₹2,500
- PF @12%: ₹1,800
- Total: ₹26,800
So, can a company first deduct employees' contribution to PF from the basic salary and then deduct the employer's share too?
Is it acceptable to calculate as 26,800 - 1,800 - 1,800 = 23,200 as in-hand salary?
Or should it be calculated as 26,800 - 1,800 = 25,000?
I really need to understand this. When they said the employer's share is part of CTC, do both PF shares will be part of the salary structure of CTC, or just one PF? If only one PF amount is part of the salary structure, how can the employee's contribution be deducted from the basic salary after that?
Any explanation will be appreciated.
Thank you in advance!
From India, Mumbai
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Can an employee's contribution be deducted from gross salary each month before deducting the employer's share from monthly CTC?
For example, Mr. X's monthly CTC is ₹26,8000 with the following structure:
- Basic: ₹15,000
- HRA: ₹7,500
- Allowance: ₹2,500
- PF @12%: ₹1,800
- Total: ₹26,800
So, can a company first deduct employees' contribution to PF from the basic salary and then deduct the employer's share too?
Is it acceptable to calculate as 26,800 - 1,800 - 1,800 = 23,200 as in-hand salary?
Or should it be calculated as 26,800 - 1,800 = 25,000?
I really need to understand this. When they said the employer's share is part of CTC, do both PF shares will be part of the salary structure of CTC, or just one PF? If only one PF amount is part of the salary structure, how can the employee's contribution be deducted from the basic salary after that?
Any explanation will be appreciated.
Thank you in advance!
From India, Mumbai
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The concept of CTC is what the organization spends on the employee, not what the employee spends on themselves, either for statutory compliance (PF) or voluntarily (VPF). Therefore, the question does not arise to consider any spending by the employee as a part of CTC.
23,200/- less PTAX, if any, will be the take-home salary when the monthly CTC is 26,800/-. Employee contributions to PF and PTAX, if any, are not part of CTC as these expenses are not incurred by the employer for the employee.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
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40923,200/- less PTAX, if any, will be the take-home salary when the monthly CTC is 26,800/-. Employee contributions to PF and PTAX, if any, are not part of CTC as these expenses are not incurred by the employer for the employee.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531
From India, New Delhi
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Dear Friend,
The CTC means an establishment's expenditure on an employee. For example, Mr. X is an employee who receives a monthly salary as follows:
1. Basic 15000 + HRA 7500 + Allowance 2500 = Rs. 25000/- Gross
Cash in Hand of Employee is: Rs. 25000 - PF @12% 1800 = Rs. 23200/-
But the company's expenditure for that employee is Rs. 25000 + PF @12% 1800 = Total 26,800 is the CTC.
2. Suppose the establishment is under the coverage of ESI, can a company first deduct employees' Basic 15000 + HRA 7500 + Allowance 2500 = Rs. 25000/- Gross Salary
Net salary is: Rs. 25000 - (PF @12% 1800 + ESI 0.75% Rs. 157.50) = Rs. 23042.50/-
But the company's expenditure for that employee is Rs. 25000 + PF @12% 1800 + ESI 3.75% Rs. 787.50 = Total 27,588/- is the CTC.
Hope you understand the concept.
From India, Mumbai
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The CTC means an establishment's expenditure on an employee. For example, Mr. X is an employee who receives a monthly salary as follows:
1. Basic 15000 + HRA 7500 + Allowance 2500 = Rs. 25000/- Gross
Cash in Hand of Employee is: Rs. 25000 - PF @12% 1800 = Rs. 23200/-
But the company's expenditure for that employee is Rs. 25000 + PF @12% 1800 = Total 26,800 is the CTC.
2. Suppose the establishment is under the coverage of ESI, can a company first deduct employees' Basic 15000 + HRA 7500 + Allowance 2500 = Rs. 25000/- Gross Salary
Net salary is: Rs. 25000 - (PF @12% 1800 + ESI 0.75% Rs. 157.50) = Rs. 23042.50/-
But the company's expenditure for that employee is Rs. 25000 + PF @12% 1800 + ESI 3.75% Rs. 787.50 = Total 27,588/- is the CTC.
Hope you understand the concept.
From India, Mumbai
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