I have started a pharma company in Maharashtra and want to have PF as part of compensation. Please clarify how to treat employers' contribution as part of the total salary, deductions and CTC calculation.
Will Employers's contribution be added as part of the CTC and then shown as a deduction in the pay-slip?
I request a detailed answer.
From India, Mumbai
Will Employers's contribution be added as part of the CTC and then shown as a deduction in the pay-slip?
I request a detailed answer.
From India, Mumbai
There are two issues - Monthly gross and CTC. Employer's contribution to PF is a part of CTC not a part of gross monthly salary and Pay Slip. As new labor Code is knocking at the door, better to start with CTC. If the employee is covered under ESIC, then deduct the ESIC amount and any other insurance contribution if any from CTC. Make it 50% which will be Basic. From rest 50% distribute to annual components and monthly components including employer's portion of PF. Pay slip will include monthly gross amount only. Example:-
CTC - 5,00,000/- per year. Insurance premium - mediclaim ETC. 20,000/- per year. Therefore, CTC excluding insurance premium per year will be 4,80,000/-. 50% of the same is Basic i.e 2,40,000/- per year and per month 20,000/-. Other items are also 20,000/- per month including employer's PF. Now to arrive monthly gross let us consider Statutory Bonus 1000/-per month ( 8.33% of minimum wages 12,000/- per month ), Employers' PF contribution @12% on 15,000/- or 20,000/- will be 1800/- per month or 2400/- per month. Annual leave en-cashment may be 15 days basic i.e 10,000/- per year or 833/- per month.
All above will not appear in monthly gross as those are yearly components or employer's portion of PF. Now, if we deduct the above from other 50% i.e 20,000/- , the left over amount will be 20000 - 1800 - 1000 - 833 = 16367/- per month.
Now, monthly gross and pay slip amount will be 20,000 + 16367 = 36,367 . It may be possible to distribute 16,367/- in to different pockets - HRA, CCA, SPL. ALLW, CEA etc. etc.
Depending on remuneration structure of different organizations , the calculation will also vary.
S K Bandyopadhyay ( WB, Howrah),
CEO- USD HR Solutions
From India, New Delhi
300CTC - 5,00,000/- per year. Insurance premium - mediclaim ETC. 20,000/- per year. Therefore, CTC excluding insurance premium per year will be 4,80,000/-. 50% of the same is Basic i.e 2,40,000/- per year and per month 20,000/-. Other items are also 20,000/- per month including employer's PF. Now to arrive monthly gross let us consider Statutory Bonus 1000/-per month ( 8.33% of minimum wages 12,000/- per month ), Employers' PF contribution @12% on 15,000/- or 20,000/- will be 1800/- per month or 2400/- per month. Annual leave en-cashment may be 15 days basic i.e 10,000/- per year or 833/- per month.
All above will not appear in monthly gross as those are yearly components or employer's portion of PF. Now, if we deduct the above from other 50% i.e 20,000/- , the left over amount will be 20000 - 1800 - 1000 - 833 = 16367/- per month.
Now, monthly gross and pay slip amount will be 20,000 + 16367 = 36,367 . It may be possible to distribute 16,367/- in to different pockets - HRA, CCA, SPL. ALLW, CEA etc. etc.
Depending on remuneration structure of different organizations , the calculation will also vary.
S K Bandyopadhyay ( WB, Howrah),
CEO- USD HR Solutions
From India, New Delhi
Sonia Sinha,
The amount an employer spent on an employee to retain his service is called CTC. The CTC is not the actual salary of an employee (it includes salary, leave travel allowance, bonus, house rent allowance, employer contribution of PF and medical reimbursements).
Thus, the employer PF is part of CTC but not shown on Salary Slip.
From India, Mumbai
The amount an employer spent on an employee to retain his service is called CTC. The CTC is not the actual salary of an employee (it includes salary, leave travel allowance, bonus, house rent allowance, employer contribution of PF and medical reimbursements).
Thus, the employer PF is part of CTC but not shown on Salary Slip.
From India, Mumbai
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Further Relaxation For Employers On Filing Of ESI Contribution For The Period October 2019 To Ma.pdf