Journey of withholdings
After Anil explaining what withholdings meant, Ritika wondered where did they actually go.
Anil clarified her concern by telling her about the different areas where the money went.
These areas are: -- Provident Fund -- Employees State Insurance Corporation (ESIC) -- Professional Tax -- Labour Welfare Fund
1) Provident Fund (PF) Calculated at 12% of Basic + DA + Special Allowance The employer and the employee both make an equal contribution of 12% each. Goes to the PF account of the employee.
2) Employees State Insurance Corporation (ESIC) Deductions towards ESIC are mandatory for employees whose gross salary is not more than Rs. 21,000.
3) Professional Tax Tax levied by Governments of certain states on salaried employees. The amount of Tax that is deducted varies from state to state where they are applicable.
4) Labour Welfare Fund A contribution made by salaried employees for the benefit of the labour class. he employer and the employee both make contributions and the employer pays approximately twice the employee contribution.