employer contribution PF

Sreejith s (Querist) 18 October 2014 This query is : Resolved
My company is deducting employer contribution PF also fro my monthly gross salary in addition to employee contribution. I want to know whether this is legal. According to PF rules , employer contribution should be deposited by a company and it should not deduct it from employee's salary. Pls advice.

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Sreejith s (Querist) 18 October 2014
My company is deducting employer contribution PF from my monthly gross salary in addition to employee contribution.I want to know whether this is legal.according to PF rules,employer contribution should be deposited by a company and it should not deduct it from employee's salary.pls advice

Kumar Doab (Expert) 18 October 2014
Employer's contribution to PF can not be recovered from employee/can not be deducted from earned wages of employee.

It is certainly illegal.

The salary slip showing payouts and all deductions has to be supplied to employee at least a day before the disbursement of wages on the usual/fixed pay day.

If salary slip shows deduction of employer's contributions is not being supplied or if supplied, but does not show unpaid amounts (actually paid) or if it shows deduction of Employer's contribution to PF then you can lodge complaint with;

Inspector under Payment of Wages Act

Inspector under Shops and Commercial Establishments Act

thru RPFC in nearest PF office

O/o Labor Commissioner

of course under proper acknowledgment.

Sreejith s (Querist) 18 October 2014
Thanks for reply. My gross monthly salary is rs 62500/- and the company is deducting rs 3000/- from it and also rs 780/- from the same gross salary. Actually they should not have deducted this 780/- from my gross salary.

Sreejith s (Querist) 18 October 2014
They says rs 3000/- is employee contribution and rs 780/- is employer contribution. But why they are deducting employer's contribution from my gross salary I cannot understand. When I ask them they say that there is a rule.

Sudhir Kumar, Advocate (Expert) 18 October 2014
agreed with Mr Kumar Doab. There is no rule to deduct employer share from salary. You should give a complaint in writing to the Regional Provident Fund Commissioner.

Sreejith s (Querist) 18 October 2014
Thanks sudhir sir and kumar sir. I have one more doubt. Whether PF rule will be different for small companies. My company is of 60 employee size.

V R SHROFF (Expert) 18 October 2014
Q;Whether PF rule will be different for small companies.
A: NO

Kumar Doab (Expert) 18 October 2014
If Employer’s Contribution has been deducted from your salary then you have a ‘GOOD CASE’.
Any deduction from earned wages has to be shown in salary slip. Obtain the record of deduction of 'Employer's Contribution of PF' from your earned wages.
The employer has restricted its contribution to old wage ceiling of Rs.6500/.................that is why it is 780/
You can complain and agitate, with whatsoever proof you have got.
Saying is verbal mode of communication and is not on record.
Record each response of the company (audio/video/written in the shape of minutes)..............
If company has quoted some rules then it has to substantiate its statement by printed version of rules.

Rajendra K Goyal (Expert) 18 October 2014
Well advised by the expert Kumar Doab, agree to it.

Advocate. Arunagiri (Expert) 18 October 2014
The company will not deduct employer contribution from your salary. If your salary slip says that, give a complaint to the PF commissioner.

I am of the opinion this Rs.3000 would have been deducted for any other purpose like TDS.

Sreejith s (Querist) 18 October 2014
Arunagiri sir, Rs 3000 is deducted as employee contribution and rs 780/- as employer contribution. So total sum of rs 3780/- is deducted every month from my salary.

Kumar Doab (Expert) 18 October 2014
The employer has deducted PF:

Employee's contribution: on PF wages as per def. of wages in the Act or to a higher amount as proposed by employee, by not restricting it to old wage ceiling of Rs.6500/

Employer's Contribution: by restricting it to old wage ceiling of Rs.6500/

If the salary slip shows deduction of employee's contribution then it should also show deduction of employer's contribution, if employer's contribution has also been deducted from earned wages.

If you are not able to handle the matter on your own you may proceed thru your able lawyer.

Sudhir Kumar, Advocate (Expert) 18 October 2014
@ author

you have been clarified that it is illegal deduction and further blogging on this site will not serve purpose.

You have also been told where to complain.

You stand advised.

Kumar Doab (Expert) 18 October 2014
You have not stated even once that deduction of 'Employer Contribution' is shown in salary slip or not......................and Does the amounts paid stated in salary slip and actually credited match?

If employer has shown deduction/'Employer Contribution' in CTC sheet narrating the annual wages/pay package the remedy and approach is same..............

The designation and salary alone does not decide a person shall be covered as 'Workman', 'Employee' in various enactments applicable to the establishment and employee.

Such matters should be properly highlighted to various employee's/trade unions and such employers should be made famous/popular..............in the community of employees.

>>> Industrial Disputes amendment (2010)Act: All establishments have to have Grievance Redressal Machinery.

>>> Industrial Disputes Act: CHAPTER II: AUTHORITIES UNDER THIS ACT
3. Works Committee

>>> Standing Orders might also be applicable.Employer personally is held responsible for faithful observance of standing orders.

>>> Such companies are covered by (name of the state) Shops and Commercial Establishments Act, that was enacted to govern the service conditions of employees working in establishments covered by this Act.

>>> Employee should become member of Trade Unions, like CITU/INTUC/AITUC/BMS.................................Employee's unions and be properly informed.

Sreejith s (Querist) 18 October 2014
Thanks kumar sir and sudhir sir and others who helped me with information.I will proceed according to your advice. Yes kumar sir the employer deduction is mentioned in salary slip.

Kumar Doab (Expert) 19 October 2014
You have a good case.

Record the statement that it is as per rules for PF.

You May proceed further.

Sreejith s (Querist) 23 October 2014
Kumar sir,sorry to ask a doubt again. While filing a complaint regarding the PF deduction ,whether I should first file a case in court or in PF office?which will be having higher impact? Thanks in advance.

Anirudh (Expert) 23 October 2014
Dear Mr. Sreejit,
You have to first know the break up of your monthly salary.
The first and foremost point that you should know and note is as to what is your BASIC pay? Then what is your Dearness Allowance?

These two components put together will be your monthly salary. The employer is supposed to contribute 12% of the salary towards provident fund.

Find out how much the employer is contributing. If the employer's contribution is more than 12%, then the excess amount so contributed by the employer is taxable in your hands.

I suspect, that the employer may be contributing much more than 12% of your salary, and on that excess amount he is deducting TDS.

Please completely check up and revert.

Sreejith s (Querist) 23 October 2014
My appoint letter mentions as below:
Basic pay 25000
Hra. 10000
Educational allowance 200
Travel allowance 1000
Lunch allowance 1500
Medical allowance 1250
Living allowance 20687
LTA 2083
Employer PF contribution 780
--------------------------------
Gross salary. 62500
---------------------------------

In salary slip they shows this employer PF deduction from gross salary. According to the advice given to me by the experts , I have to conclude that this deduction is illegal and I can go for case.

Anirudh (Expert) 23 October 2014
If you give half information, then you will get only half answer.

From the details provided by you, you have no case whatsoever for grievance. Your grievance is totally unfounded.

When in the appointment letter they indicated Employer Contribution Rs. 780/- they have indifcated it to show what the Cost to the Company (CTC) that your employment with the company would be. Therefore the Rs. 780/- is to be remitted by them directly to the PF. It will not be given to you in your hand every month. That does not mean that they are deducting from your monthly salary.

Sreejith s (Querist) 23 October 2014
They did not specified anywhere about CTC. They only specified about gross salary.my doubt is instead of including it in CTC why they included it in gross salary. Whether gross salary and CTC are of same meaning. Sorry to ask this doubt.

Anirudh (Expert) 23 October 2014
In your fact situation,YES, both mean the same thing. In any case they have said that it is contribution to PF. If it is contribution to PF, why they should give it to you? If they give it to you, then instead of the employer, you have to remit it to the PF A/c. Whether you remit or they directly remit it, to that extent there will be deduction in your salary. Therefore, you cannot say that they are deducting from your salary.

Sreejith s (Querist) 23 October 2014
Some companies are using the term CTC and gross salary differently. But some companies are using these terms as same meaning. We poor employees are confused :-) in all my previous companies they never show this employer contribution under gross salary so i got confused and thought to clear it here. Anyway thanks for you reply. :-)

Kumar Doab (Expert) 23 October 2014
CTC sheet and salary slip are two entirely different things. TDS is deducted based on enteries in salary slip.You have once again mentioned that employer's contribution to PF is computed in salary slip.
In salary slip the enteries are credits and debits and net amount payable and paid.

If employer's contribution to PF is debits entry and is deducted then you certainly have a good case.

Anirudh (Expert) 23 October 2014
There should not have been any room for confusion.

You yourself say that in your previous employment they did not show the PF Contribution in gross salary. Since they did not show, you received the entire salary shown as Gross Salary.

In the present case, they have shown the PF Contribution in the gross salary. Since here they have included it in gross salary, to that extent the same will be deducted.

The earlier one is total exclusion. In the later case it is first inclusion and then deduction.

Sreejith s (Querist) 23 October 2014
Yes kumar sir
1. Employer contribution PF is mentioned as debits entry .
2. At the year end while calculating tax deduction, they have included this employer contribution also in it in form16(which I feel is against tax laws).

Sreejith s (Querist) 23 October 2014
Aniridh sir, pls check kumar sir reply. He says that whatever it is the PF deduction should not be entered in salary slip. Because whatever entered in salary slip is finally going for TDS calculation.

Anirudh (Expert) 23 October 2014
You are getting extremely confused.

You say that they are showing Employer Contribution as debit entry. I think you mean your monthly salary slip. In that case, please indicate all the credit items, and all the debit items.

Similarly, you say that they are showing it in Form-16, please indicate in detail all the entries (not only the pf entry) shown in Form-16.

Sudhir Kumar, Advocate (Expert) 24 October 2014
you are not entitled for TDS rebate on employer contribution. If such rebate is being given to you that means the employer contribution is recovered from salary.

But now you have since my last reply, also added the concept of CTC that means there is no case f PF violation an on the contrary you are being given more rebate than due in Income Tax.

Sreejith s (Querist) 24 October 2014
Sudhir sir, even though there is no of violation, now there is a tax violation. Getting a tax rebate by including employer contribution of PF is against law is it not? Even though I get the more rebate , its illegal to do like this for all employees. I have to take this to tax department and complain against the company.

Anirudh (Expert) 24 October 2014
Dear Sreejith,
You are simply picking from what one expert or the other says and then harp on it to build your point.

That is not the way to go about, especially when you are not clear about the things yourself.

Please give the credit side items and debit side items in your salary slip. That will provide the answer. Why are you shying away from giving this while I requested you to do so much earlier than Mr. Sudhir's post?

Sreejith s (Querist) 24 October 2014
Mr anirudh , as you said I am not picking from one expert or other. Kumar sir and sudhir sir was the one
Who were giving me and helping me with their reply from first itself so my question is to them. Moreover kumar sir has already made it clear that "employer contribution of PF" cannot be included in tax deduction part. In my case as I said it is added in tax deduction part. So no confusion on this as of now. Kumar sir has already answered my question and I will proceed according to his advice. Thanks

Anirudh (Expert) 24 October 2014
THANK YOU FOR YOUR CLARIFICATION.

Earlier you wanted me to check the answers given by Mr. Kumar. That's why I asked you for the details, otherwise I would not.

Please do not forget to post the outcome of your efforts. That will educate me.

All the bests.

Sreejith s (Querist) 24 October 2014
Mr.anirudh, my question was to kumar sir only and you came in between and confused more. Anyway thanks for your time. Kumar sir was almost there to conclud.I will post the out come personally to kumar sir and sudhir sir who have taken their time and helped me. Thanks.

Anirudh (Expert) 24 October 2014
Please yourself. It does not affect or bother me a bit.

Sudhir Kumar, Advocate (Expert) 24 October 2014
it is Income Tax violation. Not by the employer alone but by the employee as well.

Some complaint to Income Tax deptt, get all the employees fined for submission of wrong return. Get the employer fined for wrong deduction.

Then survive in the company.

Anirudh (Expert) 24 October 2014
Dear Mr. Sudhir,
I am making this post only to you and not to anybody else.

I am not sure what is the income tax violation that is being talked about? I am not at all clear.

Having paid the money (salary + PF Contribution) the employer (Company) is entitled to claim deduction of the entire amount as business expense. I do not see any income tax violation in this.

Now coming to TDS - All the amounts deducted as tax at source (TDS) has to be remitted to the Government. The Company does not retain anything to itself. It has to give certificate of TDS to the deductee. The deductee in turn has to adjust the TDS and pay only the balance tax or claim refund. Nothing comes back to the company. Therefore, where is the income tax violation even here?

Would you mind clarifying to me. I do not mind even if you can clarify through PM.

Thanks & Regards

Sudhir Kumar, Advocate (Expert) 24 October 2014
I clarify my feeling on open thread also as some other expert may also have doubt.

If I am wrong I will be entitled and happy to be corrected.

True that employer is entitled to rebate on Income Tax on the employer contribution remitted by him.

On the same time employee is entitled only to the rebate on the employee contribution only.

But our querist is not very clear on his facts. He has stated

"they have included this employer contribution also in it in form16(which I feel is against tax laws)"

Thismeans :-

either

(1) employee is made to pay the employer contribution. (which is violation of EPF ACt 1952 and rule smade thereunder.

or

(ii) employer is making this contribution and adjusting this as a factor of cost to company but allowing the Income Tax relief to the employee. This if true is evasion of Income Tax.

The querist is still vague that whether the rebate in employer contribution is only being allowed to employees or the employer is also seeking rebate on the same.

Anirudh (Expert) 24 October 2014
Dear Mr. Sudhir,

Thanks for your clarification.

I understand that your views is based on the not too clear facts revealed by the querist.

Thanks a lot once again.

Kumar Doab (Expert) 25 October 2014
It is loudly clear that you have a purpose that you want to achieve and you are determined and you have docs in your hands. It is a practice and tactics to subdue the employer by telling the employee ………………….’If you want to survive………………..just ignore it…………………..and don’t rake up the issue’………………….by personnel within the company and even in enforcement agencies for various reasons.
It is your call to take the matter to its logical conclusion in a manner deemed fit at your end……………………..however you should be firm and sure before you proceed further.
I concur with experts that you should reveal all the credit/debit entries in salary slip, Form16 and also that you should not quote one Expert’s comments to other Expert. IN this thread the Experts have moderated the thread and many new points can emerge……………….. and every one shall gain from this thread.

Although employer assign responsibilities to employees e.g. PF to designated employee in HR ……………………..employer does have an accountability.
Gross Salary: Basic+DA, other allowances etc as negotiated and firmed by employer with employee……….Employee’s Contribution to PF is shown in Gross salary………………as per prevailing practices………
Take Home Salary: Gross salary-statutory deductions like PF/ESIC
CTC: Employer’s Contribution to PF is shown in CTC………………as per prevailing practices………CTC is
a concept devised by employer and their counsels in HR personnel/legal cell to arrive at total cost due to the presence of the employee in the establishment and reduce the payables to employee…………………….There are some costs that employer declare to employee during firming up the package with selected employee………………………….Since it is a concept devised by employers as per various publications sometimes some strange things happen, juts to inflate the amounts to selected candidate………………………………Think for a moment the employer flaunting to employee that there is a Gym, modern washrooms, lockers, vacuum cleaning to scrub the floors on which employee walks and that has to be cleaned, matrix cards to mark the entry/exit/attendance, elevators, I.Card………………….. that has a cost. As per some threads at LCI too some employers do deduct the cost of I.card in FnF statement/settlement…………………….The employer can very well include anything in CTC sheet inserted and kept in its own records without adding these in CTC sheet provided to employee. IN the name of CTC employer can not litter nuiance.

There are some costs on employer that can not be recovered from employee and some of them are as per an instrument of law/statue………………….e.g. Employer’s contribution to PF, license fee of various licences that employer has to obtain for its establishment, taxes that employer has to pay to Govt., excise etc………………
Even if Employer’s Contribution to PF is a cost to employer it can not be included in Gross Salary of the employee! It can not be recovered from employee! This cost has to be born by employer alone. It is not an amount payable to employee! Employer is legally bound to pay it to the lawful authority, not the employee! It is earnestly felt that employer has restricted employer’s contribution to PF to old wage ceiling and has shown the same in his costs/expenses. You may show all the docs as discussed with confidence to your CA/Income Tax lawyer/Labor Law consultant/and even HR consultant…………………… RPFC in nearest PF office and proceed further.

Taxes are to be deducted and paid in fair and transparent ways that are prescribed and acceptable to Taxman as per prescribed/acceptable ways/formats.

If there is a transgression by employer and you have an evidence you shall succeed.
With the understanding from your posts and points posted by you so far it is felt that you have a good case.

Kumar Doab (Expert) 28 October 2014
There is nothing called CTC in enactments applicable to establishments.
It is a private term coined by attorneys of employers in HR,Personnel,legal cell.
The employment is contracted on wages/salary/pay that is the amounts that shall come to employee as a fruit of his labor.
In break up mentioned by you totaling to Rs.62500/ the attorneys of employer, thus employer itself has mentioned the
Employer's contribution to PF.
This is wrong.
Hence you should succeed.

Guest (Expert) 28 October 2014
Dear Author,Hope your Query is Resolved.The So Called Expert who is Not Sure about Himself and being Anonymous should Post his doubts in a Seperate Thread posting his Query with out Un Neccessarily Disturbing Others and the Author.

Anirudh (Expert) 28 October 2014
The fellow who came to this LCI much after the socalled Anonymous should keep his traps shut.

Guest (Expert) 28 October 2014
Dear Author,There is no surprise that Anonymous would be capable of any thing being Un Traceables

Anirudh (Expert) 28 October 2014
When every second fitting reply is being given, still to hide ones inability, claims the other one is untraceable.

Guest (Expert) 28 October 2014
Dear Author,Better Not to Speak the Evil,Listen the Evil or Even to See the Evil which is Anonymous.(See the Question Mark in their Identity just Anonymous)

Anirudh (Expert) 28 October 2014
Try your luck. Sounds like a New Mahatma Gandhi in this LCI!

Guest (Expert) 28 October 2014
Anonymous would be Further Ignored in this Thread.The question mark speaks about them.

Anirudh (Expert) 28 October 2014
Least bothered, unlike you who wants to grab attention by tantrums, a Fellow not able to give answers supported by legal provisions and judicial pronouncements. So much for his knowledge, he could not even identify an exclamation mark with a question mark!!!

Sudhir Kumar, Advocate (Expert) 28 October 2014
enough

you will not act on advise and keep blogging here.

Kumar Doab (Expert) 29 October 2014
Who will not act on advice?

Which advice?

Who will stop blogging here ?

Kumar Doab (Expert) 29 October 2014
Whatever be the term used by the employer e.g. CTC all amounts are those that are contracted to be received by the emplyee.
Hence if employer has contracted employee on the basis of CTC then everything stated in CTC is rightfully of employee.
It is as simple as that.

Kumar Doab (Expert) 29 October 2014
_Deleted due to repitition_

Kumar Doab (Expert) 29 October 2014
It is highly unfortunfortunate that reference to the father of the nation in disrespectful manner has been made.

That too in a legal and social portal.

The matter in this thread does not require reference leave apart pronouncement of any judicial reference.

Kumar Doab (Expert) 30 October 2014
1. TDS by deductor (Employer): Employee is not responsible if it is right or wrong.

Employer is accountable if there's an error and if error is not corrected.

2. Employee can lodge complaint with ITO-TDS where employee files ITR and jurisdictional CIT-TDS where employer files ITR.

CTC has been discussed.

Kumar Doab (Expert) 01 November 2014

CTC is not recognised in law. Only gross salary is recognised. The action of your company is illegal.
The PF act is clear that employee's contribution to PF can de deducted from the salary of the employee but employee's salary can not be deduced to pay partly of wholly the employer's contribution to PF. The employers contribution can not be recovered.

The company will be liable to differential wages, penalty and even possibly a criminal persecution.

You may approach your counsel/lawyer/union leaders/PF authorities with confidence.

You may fully ignore the remarks on so called inclusion and exclusion.

The controversy in this thread has ununnecessarily been raked up.

This is display of most limited understanding of the matter that was ever posted at LCI.

It is preturbing since even HR professionals visit LCI to clarify their doubts.

On the contrary now it is suggested that the advocates/experts should visit HR professionals.

It is disturbing that the limited experts are arrogant too.

It is proposed that such experts should open the books again for basics.

Anirudh (Expert) 15 January 2015
I am looking forward to hearing from Mr. Sreejith about the latest position in this issue. Whether he could succeed in his efforts and get the PF? This will help me in updating my knowledge.

employer contribution PF

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