Impact of PF Contribution's Relief to Employers and Employees

In May'2020. Government has announced to reduce PF contribution's from 12% to 10% for both the Employees and Employers. It will be applicable only for 3 months. Employer contribution will be paid by Government. Whereas Employee contribution will be paid by Employee themselves. 

Now, how it will increase your inhand salary. 
Eg. 1st case- If your old PF Contribution was 1800(12% of 15000). Now it will be 1500(10% of 15000). So in hand salary will increase by 300. 
[Note-If in the Appointment Letter or Offer Letter mention about Gross Salary. And there is nothing mentioned about Employer Contribution or the Salary break up is not in the form of CTC.]

2nd Case-If in the Appointment Letter or Offer Letter mention about CTC. And there is mentioned about Employer Contribution also.

Then taking the same above example your in hand salary will increase by 600.


To calculate the same as per government announcement. Goto PF Deduction Column of Salary Slip. 
《{(Old PF amount / 12)*100}*10%》

[Note- 10% of PF Contribution's is only for 3 months]


Comments

  1. Sonali KhatnaniJuly 22, 2020 at 10:42 PM

    Great effort. Can you please explain the case 2 with a detailed illustration it's calculation is unclear.

    ReplyDelete
    Replies
    1. Gaurav PahujaniAugust 9, 2020 at 10:55 PM

      If Employer has put a bifurcation of salary and it includes Employer's Contribution too. Then add the same amount in net salary.
      For illustration- If Employer Contribution is 1800(12% of 15000). As per Govt. rule. Employer needs to contribute 1500(10% of 15000). The extra amount of 300 is added in Net Salary.
      So In-hand salary increased by 600.

      Delete

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