Quick Answer: How Is PF Calculated In CTC?

How is monthly CTC calculated?

CTC = Direct Benefits + Indirect Benefits + Savings ContributionsDirect Benefits refer to the amount paid to the employee monthly by the employer which forms part of his/her take-home or net salary and is subject to government taxes.Indirect Benefits refer to the benefits that employees enjoy without paying for them.More items…•.

How is PF calculated on CTC salary?

Employer Provident fund/EPF or Provident Fund In this case the company has an option to either contribute 12% of 15,000 (i.e. 1800) or 12% of Basic salary. It is directly deposited in the employee’s PF account. … Hence, 12% of the basic salary gets contributed by the employee and another 12% by the employer.

What is current PF limit for salary?

Rs 15,000 per monthEmployees drawing less than Rs 15,000 per month have to mandatorily become members of the EPF. However, an employee who is drawing ‘pay’ above prescribed limit (currently Rs 15,000) can become a member with permission of Assistant PF Commissioner, if he and his employer agree.

What is new PF rules?

Under the new Code, employees are also likely to get higher gratuity payments and employer’s contribution towards their Provident Fund (PF) corpus. As per draft rules, wages for the purpose of calculation of gratuity and contribution to PF will have to be at least 50% of employee’s total salary.

What is CTC salary?

Cost to company (CTC) is a term for the total salary package of an employee, used in countries such as India and South Africa. It indicates the total amount of expenses an employer (organisation) spends on an employee during one year. … Employees may not directly receive the CTC amount.

What is current CTC for fresher?

CTC or Cost to Company is the total salary package and benefits of an employee per year. It is basically the amount that a company or employer is willing to spend both directly and indirectly on you as it’s employee. CTC is inclusive of monthly components such as basic pay, various allowances, reimbursements, etc.

Which is better CTC or gross salary?

Gross salary is the amount after the EPF and gratuity are subtracted from the CTC. Basically, the remuneration paid before deducting the income tax, professional tax, and other deductions. It is inclusive of bonuses, overtime pay, paid holiday amount, and other differentials.

How is PF salary calculated?

Calculation of PF PF contribution has to be made both by the employees and the employer. The contributions get accumulated in the provident fund in the name of the employee. The contribution of the employer is 12% of the basic wage plus dearness allowance or DA. The employee makes an equal contribution.

Can I take out my PF money?

Yes, you now have the option to withdrawn from your EPF corpus. However, since the money contributed by you to your EPF account is a type of forced saving, withdrawing from your EPF corpus should be your last resort. So, consider and exhaust all other options before withdrawing from your EPF account.

Is VPF better than PPF?

PPF vs VPF: Interest rate, lock-in period Currently, VPF gives higher returns than PPF. While PPF is offering 7.1% interest, VPF is offering 8.5% interest. Making VPF contributions is very simple and straightforward. Unlike PPF, you don’t need to open an account with a registered bank or post office.

How PF is deducted from CTC?

In Cost to Company (CTC) model, if ₹10,000 is monthly EPF wages, the employee gets ₹200 more directly from employer as employer’s EPF/EPS contribution is reduced and ₹200 less is deducted from his/her wages,” it said. … These establishments shall continue to contribute 12% of basic pay and DA.

Is EPF included in CTC?

Most employers contribute 12% (called PF) of basic salary every month to employee’s Provident fund account, shown in CTC. An employee also contributes 12% (called VPF). … Employer PF is part of CTC not shown on Salary Slip.

What does CTC include?

The CTC includes all the elements of a salary structure – basic salary, House Rent Allowance (HRA), Basic Allowance, Travel Allowance, Medical, Communication, Provident Fund, Pension Fund, and or any incentives or variable pay. … The entire amount of your basic salary is included in your take-home salary.

How PF is calculated with example?

The employee contributes 12 percent of his or her basic salary along with the Dearness Allowance every month to the EPF account. For example: If the basic salary is Rs. 15,000 per month, the employee contribution shall be 12 % of 15000, which comes to Rs 1800/-. This amount is the employee contribution.

How is PF value calculated?

To understand how the EPF calculator works, let us have an example. Employers contribution towards EPS = 8.33% * 14,000 = Rs 1,166. The total contribution that is made by the employer and employee towards the EPF account of the employee = Rs 1,680 + Rs 514 = Rs 2,194. You have the interest rate at 8.5% for FY 2019-20.

Is PF deducted from gross salary?

An employee’s gross salary is the amount they receive before deductions. … The employee’s provident fund (PF) contribution is deducted from their gross pay.

What percentage of CTC is take home?

Basic Salary: It is the employee’s basic income and is around 40%-50% of the total salary. The employer pays the employee for his skill, experience, and qualifications. The basic salary is a fixed component of the CTC (Cost To Company) package.