Is It Fair for CTC Companies to Deduct Double Payment for PF? Let's Discuss

In CTC Company, will deduct double payment for PF. Is it correct or not?

They are not supposed to deduct the employer contribution, but small companies are doing it.

Well, CTC means Cost to Company, and if they are implementing the same, it is not incorrect.

Yes, I do agree with Anuj because CTC means Cost to the Company for the particular employee. These days, the majority of companies, especially software companies, are following this concept. In this concept, both the contributions of the employee and employer will be shown as a part of CTC. In this aspect, there is no mistake.

Actually, earlier there was no CTC concept, so by default, the employer had to pay their contribution other than the employee's salary. That is why it is called Employer Contribution. Still, some companies are following the same, but they are very few.

Dear All,

Both shares of PF are part of CTC, but the employee's share of PF/ESI is deducted from the gross income of the employee. Anyways, the employee will be affected.

Thanks,
Vivek Mishra

NO. Including the employee's share of PF contribution in the CTC is unethical and most inappropriate. Employee's share of PF contribution is not a cost to the company.

Vasant Nair

I disagree with you. When you refer to CTC, it is the total amount, which is the Cost to Company, and not the take-home salary. The PF paid by the company is for you (the amount paid to you) and not for the company. You will receive that amount. Therefore, that is the cost to the company for keeping you or hiring you.

So, when calculating CTC, all the expenses that the company will incur on you need to be taken into account. This may also include housing, telephone bills, transportation, etc. However, many companies do not include these expenses in CTC calculations, as they report them directly to the Government of India and not as part of the employees' compensation.

Dear SReddy, as has been discussed by many, it is correct when referring to CTC and not when discussing take-home salary.

Regards

Dear all,

Cost to the company means all the costs incurred by the company over the employee. Therefore, HR should deduct both-side contributions from the gross salary.

With Regards, Reetesh Kumar Singh HR Executive ITSL Patna

As far as PF is concerned, under the EPF & MP Act 1952, contributions are to be deducted and deposited on the wages paid or payable. Employers cannot deduct the employer's share from the wages of the employee. For the definition of wages, Section 2 of the Act may be seen on the website of EPFO at http://www.epfindia.com.

I agree with Neeraj. As CTC itself says "Cost to company," and if this is so, PF (employer and employee) can be deducted from CTC. This is very much ethical.

Regards,
Sweta

Don't waste your time on this common question. It is well known that the deduction of PF is always beneficial for employees.

CTC - Cost to company. If any company is deducting double PF, then it isn't wrong.

Understanding the Cost of Employee's PF Contribution to the Company

Can you please explain how the employee's share of contribution to PF is a cost to the Company? The total amount paid by the Company towards PF includes my own contribution, which is my money and is recovered from my salary each month. How can you say that this total amount is a cost to the Company when I receive the PF dues, part of it is my own money? How can this be a cost to the Company when my own money is being returned to me?

Incidentally, I have not talked about take-home pay at all in my response.

Best Wishes,
Vasant Nair

Dear Amit Singhal,

Most companies in India include PF-Employer Contribution in CTC, and in my view, it is correct. When we talk about CTC, it means the complete COST TO COMPANY for an employee. Therefore, it is acceptable if any company considers the Employer's contribution of PF in the calculation of CTC.

Regards,
Amit Singhal

Understanding Employee Wage and CTC

The wage for an employee is their gross pay and not the CTC. From the gross pay, the organization will deduct the employee's contribution and pay the remaining net pay to the employee. CTC is the total cost the employer incurs to have an employee. Here, Gross pay + Employer contribution of PF & admin charges (13.61%) + Gratuity + Superannuation, etc., are added. Therefore, the employee's contribution for PF is not included in CTC.

Regards,
Mohanan

Provident Fund Deduction Policy

Hello everyone, we deduct 12% of the basic salary, and if employees are absent, their salaries are deducted, resulting in a lower basic salary every month. This causes the Provident Fund (PF) contribution to change monthly.

Our company also wants to apply the same rule and deduct double the PF from the Cost to Company (CTC), i.e., both the employee and employer contributions. In this scenario, the question arises on how the PF should be deducted - whether a fixed amount of PF should be deducted each month (inclusive of both contributions) or 24% of the basic salary monthly.

Please reply.

Thanks and regards,
Meenu

Dear Vasant, say you would not have joined the company—do you think that the company would have still spent that amount on employing you? The company has to pay the COST TO COMPANY for employing you. Mohanan has given a good explanation. I hope it is clear. Still, if you have confusion, please approach your HR head, and he would explain in detail.

Best Regards,
Neeraj4all

Understanding Employee's Contribution to PF as a Cost to the Company

Can you please explain how the employee's share of contribution to PF is a cost to the Company? The total amount paid by the Company towards PF includes my contribution, which is my money and is recovered from my salary each month. How can you say that this total amount is a Cost to the Company when I receive the PF dues, part of it is my own money? How can this be a Cost to the Company when my own money is being returned to me? Incidentally, I have not talked about take-home pay at all in my response.

Best Wishes,
Vasant Nair

Dear all,

At the same time, canteen, transport, uniform, personal safety helmet, shoes, and aprons are all items that are covered by the company's costs. Why aren't these expenses included in the CTC?

Son,

I have spent 30 years plus in the HR stream. Please read what Mohanan has stated carefully, and then maybe you will have a revised opinion on the matter at hand.

Vasant Nair

[QUOTE=neeraj4all;1229966]
Dear Vasant,
Say you would not have joined the company - do you think that company would have still spent that amount? So on employing you - the company has to pay; that is the COST TO COMPANY for employing you.
Mohanan has given a good explanation.
I hope it is clear - still if you have confusion, please approach your HR head, and he would explain in detail.
Best Regards,
Neeraj4all]

Can you please explain how the employee's share of contribution to PF is a cost to the company? The total amount paid by the company towards PF includes my contribution, which is my money and is recovered from my salary each month. How can you say that this total amount is a cost to the company when I receive the PF dues, part of it is my own money? How can this be a cost to the company when my money is being returned to me? Incidentally, I have not talked about take-home pay at all in my response.

Best Wishes,
Vasant Nair

In my knowledge, CTC means the company already gives the employer 12% PF in your salary, so it's deducted from your salary.

CTC = Daily Wage + PF + Bonus

It's simple, as the employee PF contribution is a part of the employee's salary, and the employee's salary is a part of the CTC. Therefore, it is obvious that the employee PF contribution is a part of the CTC, and the company has to deduct this amount from the employee's salary only.

CTC Breakdown

CTC = Gross salary (Take home + PF-employee share + ESI-employee share) + PF Employer contribution + ESI Employer Contribution. Mr. Neeraj showed his disagreement with you not to hurt you but just to help you understand this basic thing. Please don't take it to heart. Sometimes even a small thing like this creates confusion.

Sorry, even I am not telling all this to hurt you.

Best Regards,
Singh S

Dear ALL,

Please take a look at the post quoted below:

"CTC = Gross salary (Take home + PF - employee share + ESI - employee share) + PF Employer contribution + ESI Employer Contribution"

As can be seen, the Employee's share of PF is ALREADY INCLUDED IN THE SALARY/GROSS SALARY; so where is the question of ADDING IT AGAIN SEPARATELY (along with Employer's share)???

To state this in other words: Once the employee's Salary or Gross Salary (which already includes the Employee's share of PF) is taken into consideration, then ONLY THE EMPLOYER'S SHARE OF PF needs to be ADDED. Please be careful, that once again adding the Employee's share of PF will make the PF component appear THREE TIMES in the CTC Calculation!!!

Hope it clarifies the issue for those who are new to HR and have a superficial understanding of the concept of CTC.

Do try to appreciate the emotions and intentions of seniors to disseminate HR knowledge so selflessly, rather than criticizing them based on one's own half-baked knowledge.

@ Vasant Nair: I appreciate your contributions; do continue to keep up the good work.

Warm regards.

Dear Vasant Ji,

It's simple: as employee PF contribution is a part of employee salary and employee salary is a part of CTC, then it is obvious that the employee's PF contribution is a part of CTC. And the company has to deduct this amount from his employee salary only.

CTC = Gross salary (Take home + PF - employee share + ESI - employee share) + PF Employer contribution + ESI Employer Contribution

Mr. Neeraj showed his disagreement with you not to hurt you but just to help you understand this basic thing. Please don't take it to heart. Sometimes even a small thing like this creates confusion.

Sorry, even I am not telling all this to hurt you...

Best Regards,
Singh S

Dear Sir, can you guide me on how CTC will be calculated? If an employee's CTC is 10,000 per month, what is his take-home salary?

In my opinion, CTC includes gross salary, PF contribution (Employee & Employer), ESIC contribution (Employee & Employer), Bonus, and workmen compensation (if not covered under ESIC).

Please reply as soon as possible.

Thank you.

Regards,
Alpesh Varia

Ethos does not allow it, but if some companies are doing so, an employee, considering a number of causes, may not find themselves in a position to battle back against it. How are you concerned with this problem?

With regards,
Shivendra