EPF (Employees' Provident Fund)
EPF is India's statutory retirement savings scheme, funded by matching monthly contributions from the employee and the employer on basic salary plus dearness allowance.
Also known as: PF, provident fund, EPF meaning, EPFO
Both sides contribute 12% of basic plus DA. The employee's 12% goes entirely to the provident fund. The employer's 12% is split: a portion goes to the Employees' Pension Scheme and the remainder to the provident fund, which is why the two balances an employee sees are not equal.
Coverage is mandatory for establishments above the threshold headcount, and employees earning above the statutory wage ceiling may be treated differently depending on whether they were already members. This is the detail that most often produces a wrong first payslip for a senior hire.
Because contributions are computed on basic plus DA rather than on gross, the salary structure directly determines the size of the deduction. A structure with a high basic produces a larger PF deduction, a larger employer contribution, more retirement savings and less monthly in-hand pay. That trade-off is a design decision, and employees rarely realise it was made on their behalf.
EPF also interacts with unpaid absence: a month with LOP has a lower PF wage, and therefore a lower contribution, which is one of the reasons attendance and payroll cannot be reconciled after the run.
Statutory note
Contribution rates, the wage ceiling and the EPS split are set by the EPFO and change from time to time. Verify current rates against the EPFO's own notifications before relying on a figure.
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ESI (Employees' State Insurance)
ESI is India's statutory health and social security scheme for employees earning below a wage threshold, funded by contributions from both the employee and the employer.
CTC (Cost to Company)
CTC is the total annual cost an employer bears for an employee — salary, allowances, employer contributions and benefits combined — not the amount the employee receives.
Professional Tax (PT)
Professional tax is a state-levied tax on employment income, deducted monthly by the employer from an employee's salary and paid to the state government.
Gratuity
Gratuity is a lump sum an employer pays an employee who leaves after five or more completed years of continuous service, calculated as fifteen days' wages for every year served.