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is it correct that both employer and employee component should be deducted from my CTC?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 asked

My CTC is 4 Lakhs ,Fixed component is 3.20 Lakhs and Variable component is 80 thousand. PF which will be deducted from Fixed component(3.20L) is shown as 19200. Income tax is 200/month. I was supposed to be receiving 25k but it came down to 23.5k because HR told me that PF will be deducted twice from my fixed component. ie. 1600*2 = 3200.

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3 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Thats's correct. EPF rule says 12% of your basic + allowance will be deducted from your gross salary and employer will match the same amount (which is included in CTC). So basically 24% of your (basic+allowance) deducted and deposited to your EPF account. For ex: Basic = 8000 Dearness allowance = 2000 PF (employee contri.) = (8000+2000)*12/100 =1200 PF (employer contri.) = (8000+2000)*12/100 =1200 So total PF deduction = 1200+1200=2400

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Dear Anju, this is a bit confusing part for most of the employees. But this is only the practise which is carried out by all the companies. Both the employer and employee contrubution form part of CTC. This is the reason I have specified both of them in ur last question about components of CTC. Employer counts every single rupee spent on his employee in his CTC. And regarding ur contribution, you are given a choice on the amount of contribution u want to make as ur part. Thus, both form part of ur CTC.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Dear Anju, Yes, HR is correct. CTC stands for cost to the company. Cost to the company include all cost i.e. contribution of employer to employee provident fund. in your case employer is correct. Employer shall be liable to deduct both pf contribution i.e. Emp[loyer and employee contribution. However you can reduce your tax liability by making tax planning. Any other query feel free to contact us. Writer CA Chitranjan Agarwal

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