Hi all,
I have one very basic doubt as I have never calculated salaries before. Now, I have to pay salary to one of my employees working in Saudi Arabia. His salary is 58333, and he started working from 6th May 2007. So, how much will his salary be for May 2007?
From India, Hyderabad
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1I have one very basic doubt as I have never calculated salaries before. Now, I have to pay salary to one of my employees working in Saudi Arabia. His salary is 58333, and he started working from 6th May 2007. So, how much will his salary be for May 2007?
From India, Hyderabad
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Hi Imtiaz!
I can let you know what we do in our company. Suppose the person's salary is X, the number of working days is 27 for workers or 31 for management. You can choose whatever you have in your company. So you can use the formula: ((X/31)*(31-6)). We make all calculations based on this.
Regards, Swati
Email: ss_swati@rediffmail.com
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I can let you know what we do in our company. Suppose the person's salary is X, the number of working days is 27 for workers or 31 for management. You can choose whatever you have in your company. So you can use the formula: ((X/31)*(31-6)). We make all calculations based on this.
Regards, Swati
Email: ss_swati@rediffmail.com
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Hi,
His monthly salary is 58,333, right?
First, calculate his per-day salary, which will be 58,333/31, amounting to 1,882 Rs.
Now, calculate this based on the number of days present, i.e., payable days - which will be 1,882 * 26 = 48,932. This amount will be given to him.
From India, Thana
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His monthly salary is 58,333, right?
First, calculate his per-day salary, which will be 58,333/31, amounting to 1,882 Rs.
Now, calculate this based on the number of days present, i.e., payable days - which will be 1,882 * 26 = 48,932. This amount will be given to him.
From India, Thana
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Hey!
For the same example: he joined on May 7th. Hence, you would need to pay him for 25 days. Calculate his salary per day: Monthly salary discussed as per the Offer letter divided by the number of days in this month will give you one day's salary. Hence, in this case, 58333/31 will give you one day's salary, which is equal to 1881.70. Now calculate for 25 days: 1881.70 * 25 = 47042.74. You have to pay him 47042 before deducting Professional Tax/TDS/Income Tax. Any questions, let me know.
Cheers, Gayathri
From India, Hyderabad
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For the same example: he joined on May 7th. Hence, you would need to pay him for 25 days. Calculate his salary per day: Monthly salary discussed as per the Offer letter divided by the number of days in this month will give you one day's salary. Hence, in this case, 58333/31 will give you one day's salary, which is equal to 1881.70. Now calculate for 25 days: 1881.70 * 25 = 47042.74. You have to pay him 47042 before deducting Professional Tax/TDS/Income Tax. Any questions, let me know.
Cheers, Gayathri
From India, Hyderabad
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Dear Reena,
Every company has different salary constituents. However, I will provide an example of what a typical CTC breakdown may look like. I have an Excel sheet that will assist you in calculating your approximate take-home salary. Simply fill in the CTC, Professional Tax, and Income Tax columns.
Regards,
Ms
From India
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Every company has different salary constituents. However, I will provide an example of what a typical CTC breakdown may look like. I have an Excel sheet that will assist you in calculating your approximate take-home salary. Simply fill in the CTC, Professional Tax, and Income Tax columns.
Regards,
Ms
From India
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Hi Ms,
Could you please help me with the salary breakup of Rs. 5.50 Lakhs p.a.? This is the annual salary. There is also a performance incentive of up to Rs. 2.0 Lakh per year. Kindly suggest a salary breakup so that my tax outgo can be minimized as much as possible. I have a home loan and am servicing an EMI as well.
Thanks,
Jitendra
From India, Calcutta
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Could you please help me with the salary breakup of Rs. 5.50 Lakhs p.a.? This is the annual salary. There is also a performance incentive of up to Rs. 2.0 Lakh per year. Kindly suggest a salary breakup so that my tax outgo can be minimized as much as possible. I have a home loan and am servicing an EMI as well.
Thanks,
Jitendra
From India, Calcutta
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Hi,
You can have this kind of breakup to save tax:
CTC 5.50 L-PA
BASIC - 35% OF CTC - Fully taxable
HRA - 50% OF BASIC IF IN METRO AND 40% OF BASIC IF IN OTHER CITY (exempted up to a certain limit on submission of rent receipt for 3 different months)
CONV. ALLOW: exempted up to Rs 800/pm
SPL ALLOW: REMAINING BALANCE OF CTC - fully taxable
ANY INCENTIVE - FULLY TAXABLE
LTA - EXEMPTED TWICE IN A BLOCK OF ANY FOUR YEARS
REIMBURSEMENTS
NEWSPAPER & PERIODICALS - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
MEDICAL EXPENSES: - EXEMPTED UP TO RS 15,000/SUBJECT TO SUBMISSION OF BILLS
DRIVER SALARY - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
VEHICLE MAINTENANCE - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
PETROL - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
MEAL VOUCHERS - FULLY EXEMPTED
MEDICAL REIMBURSEMENTS - 15,000/PA - TAX EXEMPTED
BELOW IS THE SAMPLE BREAKUP OF RS 5.50 L P/A
BASIC - 192500
HRA - 96250
CON ALLOW - 800
SPL ALLOW -
REIMBURSEMENTS
NEWSPAPER - 1000
PETROL - 5000
DRIVER - 5000
VEHICLE - 6000
MEDICAL - 1250
LTA - ONE MONTH OF BASIC
MEAL VOUCHER - 2400
If you have any further queries, just let me know.
KATYANA
From India, Gurgaon
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You can have this kind of breakup to save tax:
CTC 5.50 L-PA
BASIC - 35% OF CTC - Fully taxable
HRA - 50% OF BASIC IF IN METRO AND 40% OF BASIC IF IN OTHER CITY (exempted up to a certain limit on submission of rent receipt for 3 different months)
CONV. ALLOW: exempted up to Rs 800/pm
SPL ALLOW: REMAINING BALANCE OF CTC - fully taxable
ANY INCENTIVE - FULLY TAXABLE
LTA - EXEMPTED TWICE IN A BLOCK OF ANY FOUR YEARS
REIMBURSEMENTS
NEWSPAPER & PERIODICALS - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
MEDICAL EXPENSES: - EXEMPTED UP TO RS 15,000/SUBJECT TO SUBMISSION OF BILLS
DRIVER SALARY - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
VEHICLE MAINTENANCE - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
PETROL - EXEMPTED SUBJECT TO SUBMISSION OF BILLS
MEAL VOUCHERS - FULLY EXEMPTED
MEDICAL REIMBURSEMENTS - 15,000/PA - TAX EXEMPTED
BELOW IS THE SAMPLE BREAKUP OF RS 5.50 L P/A
BASIC - 192500
HRA - 96250
CON ALLOW - 800
SPL ALLOW -
REIMBURSEMENTS
NEWSPAPER - 1000
PETROL - 5000
DRIVER - 5000
VEHICLE - 6000
MEDICAL - 1250
LTA - ONE MONTH OF BASIC
MEAL VOUCHER - 2400
If you have any further queries, just let me know.
KATYANA
From India, Gurgaon
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Hi Katyana, Thanks for your help. Would it be possible for you to help me out with the salary break up. My email Id is wordsmyth at rediffmail dot com Thanx Jitendra
From India, Calcutta
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From India, Calcutta
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My company is new. The salary structure is to be modified. The heads in use are: Basic Salary, HRA, City Compensatory Allowance, Conveyance Allowance, Fuel & maintenance Reimbursement, Chauffeur Allowance, Car Lease / Laptop reimbursement, Other Reimbursements, Children's Education Allowance, Special Allowance, LTA, Medical Reimbursement, Bonus Pay, Performance Pay (fixed component, but payable annually), Employer's PF Contribution. Company Car plus fuel plus maintenance - (mentioned in case of certain employees). Other remarks on the salary slip are: All taxes and deductions are applicable as per Government Regulations. Benefits are applicable as per Company Policy. Work Tools - SIM Card for Mobile. Laptop.
Please advise on the following:
1. Are these heads correct?
2. What all heads form part of the Gross Monthly Salary?
3. Which heads do not form part of the Gross Monthly Salary but are included in the Annual CTC?
4. Any other observations.
Thanks!
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Please advise on the following:
1. Are these heads correct?
2. What all heads form part of the Gross Monthly Salary?
3. Which heads do not form part of the Gross Monthly Salary but are included in the Annual CTC?
4. Any other observations.
Thanks!
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Dear Katyan,
Thank you very much for your valuable contribution on Cite HR.
May I clarify one thing about your designed salary break-up: if we allocate a specific amount for Petrol & Driver Reimbursement, under whose name should the car be registered - the employer's or the employee's?
Please clarify.
Thanks,
Defender Kr. Sharma
From India, Delhi
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Thank you very much for your valuable contribution on Cite HR.
May I clarify one thing about your designed salary break-up: if we allocate a specific amount for Petrol & Driver Reimbursement, under whose name should the car be registered - the employer's or the employee's?
Please clarify.
Thanks,
Defender Kr. Sharma
From India, Delhi
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Hello HR professionals,
We are a USA manufacturer, starting a manufacturing unit in Gujarat, and we are not well-versed in certain salary practices. Our MD in India has advised that when we offer a gross annual salary to our employees in an appointment letter, we should break it down into several categories (Base Salary, Housing Allowance, Car Allowance, Vacation Allowance, Book Purchase, Medical Benefits, etc.). This is done, we are told, so that the employee faces fewer tax consequences.
Our USA president (me) is originally from India, as is our USA HR Manager, Archna Dhingra. However, we are not very knowledgeable (quite ignorant, in fact) in this matter.
Can someone educate us on the following:
1. If we hire a Production Supervisor, let's say, at a salary of Rs 20,000 per month, what categories should we break this salary into?
2. Are there any guidelines on what percentage to apply to each category? (e.g., 15% for Housing, etc.)
3. Can someone direct us to websites, articles, etc., on this subject?
4. We are going to provide housing to some key managers and cars to others. How should we apply the breakdown to them?
5. If we offer medical allowance or vacation allowance, do we need to ask for proof of expenses? Does this not encourage the submission of fake bills?
Thank you very much for your willingness to share your knowledge and wisdom.
-Rahul Shukla
President/CEO
S.S. White Technologies
Piscataway, NJ, USA
Website: www.sswhite.net
Email: Rahul.Shukla@sswhite.net
From United States, Hoboken
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We are a USA manufacturer, starting a manufacturing unit in Gujarat, and we are not well-versed in certain salary practices. Our MD in India has advised that when we offer a gross annual salary to our employees in an appointment letter, we should break it down into several categories (Base Salary, Housing Allowance, Car Allowance, Vacation Allowance, Book Purchase, Medical Benefits, etc.). This is done, we are told, so that the employee faces fewer tax consequences.
Our USA president (me) is originally from India, as is our USA HR Manager, Archna Dhingra. However, we are not very knowledgeable (quite ignorant, in fact) in this matter.
Can someone educate us on the following:
1. If we hire a Production Supervisor, let's say, at a salary of Rs 20,000 per month, what categories should we break this salary into?
2. Are there any guidelines on what percentage to apply to each category? (e.g., 15% for Housing, etc.)
3. Can someone direct us to websites, articles, etc., on this subject?
4. We are going to provide housing to some key managers and cars to others. How should we apply the breakdown to them?
5. If we offer medical allowance or vacation allowance, do we need to ask for proof of expenses? Does this not encourage the submission of fake bills?
Thank you very much for your willingness to share your knowledge and wisdom.
-Rahul Shukla
President/CEO
S.S. White Technologies
Piscataway, NJ, USA
Website: www.sswhite.net
Email: Rahul.Shukla@sswhite.net
From United States, Hoboken
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Hi Devendra,
Whenever we talk about "Reimbursements," it always implies that all the reimbursements should be in the name of the employee and not in the employer's name because the employer is providing these reimbursements to help the employee save on taxes. I hope this concept is now clear to you.
KATYANA
From India, Gurgaon
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Whenever we talk about "Reimbursements," it always implies that all the reimbursements should be in the name of the employee and not in the employer's name because the employer is providing these reimbursements to help the employee save on taxes. I hope this concept is now clear to you.
KATYANA
From India, Gurgaon
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Hi,
Could you please elaborate on the terms mentioned in the salary calculation format, such as TA, FEP, MA, etc.? Additionally, could you confirm the percentage applied for each head?
Could you provide me with the salary calculation for the following amounts:
a) $15,000
b) $18,000
c) $50,000
d) $70,000 and $75,000
This information will help employees save and reduce their tax burden. Please guide me accordingly.
Regards,
From India, Mumbai
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Could you please elaborate on the terms mentioned in the salary calculation format, such as TA, FEP, MA, etc.? Additionally, could you confirm the percentage applied for each head?
Could you provide me with the salary calculation for the following amounts:
a) $15,000
b) $18,000
c) $50,000
d) $70,000 and $75,000
This information will help employees save and reduce their tax burden. Please guide me accordingly.
Regards,
From India, Mumbai
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Hello Friends,
After posting my questions on salary structure, I searched the archives and found answers to most of my questions. This is a great website, and many of you have selflessly posted articles, spreadsheets, etc. I wanted to send a thank-you email to some of you, but it seems I cannot yet until I make 5 postings.
So here is a general thanks to all of you great guys.
-Rahul Shukla SSWhite Technologies, USA
From United States, Hoboken
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After posting my questions on salary structure, I searched the archives and found answers to most of my questions. This is a great website, and many of you have selflessly posted articles, spreadsheets, etc. I wanted to send a thank-you email to some of you, but it seems I cannot yet until I make 5 postings.
So here is a general thanks to all of you great guys.
-Rahul Shukla SSWhite Technologies, USA
From United States, Hoboken
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The above-mentioned Salary Calculation is ENTIRELY WRONG.
No offense.
As per the above method, let us take an example of a person whose salary has been decided as $10,000.
Further, for complete clarification, let us assume he has taken a single leave each in the months of January (31 days), April (30 days), and February (28 days).
As per "gayathri.suraparaju" suggestion:
Per Day Salary in January: $10,000 / 31 = $322.58
Per Day Salary in February: $10,000 / 28 = $357.14
Per Day Salary in April: $10,000 / 30 = $333.33
Therefore, it means your Per Day Salary varies per month!
Hence, the person's salary (after deducting only leave) will be as follows:
Salary for January: $10,000 - $322.58 = $9677.42
Salary for February: $10,000 - $357.14 = $9642.86
Salary for April: $10,000 - $333.33 = $9666.67
Even though he has taken only a single day off, there will be a huge difference in salary in particular months.
HENCE, Correct Salary Calculation should be:
Monthly Salary = $10,000
Total Days in a Year: 365
Hence, Per Day Salary = $10,000 * 12 / 365 = $328.77 (Constant Value, Non-Variable)
Therefore, the person's salary for individual months IRRESPECTIVE OF CALENDAR DAYS will vary only if the person takes a leave. NOT OTHERWISE!
I hope the salary calculation will be a lot simpler now.
Alap Desai
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No offense.
As per the above method, let us take an example of a person whose salary has been decided as $10,000.
Further, for complete clarification, let us assume he has taken a single leave each in the months of January (31 days), April (30 days), and February (28 days).
As per "gayathri.suraparaju" suggestion:
Per Day Salary in January: $10,000 / 31 = $322.58
Per Day Salary in February: $10,000 / 28 = $357.14
Per Day Salary in April: $10,000 / 30 = $333.33
Therefore, it means your Per Day Salary varies per month!
Hence, the person's salary (after deducting only leave) will be as follows:
Salary for January: $10,000 - $322.58 = $9677.42
Salary for February: $10,000 - $357.14 = $9642.86
Salary for April: $10,000 - $333.33 = $9666.67
Even though he has taken only a single day off, there will be a huge difference in salary in particular months.
HENCE, Correct Salary Calculation should be:
Monthly Salary = $10,000
Total Days in a Year: 365
Hence, Per Day Salary = $10,000 * 12 / 365 = $328.77 (Constant Value, Non-Variable)
Therefore, the person's salary for individual months IRRESPECTIVE OF CALENDAR DAYS will vary only if the person takes a leave. NOT OTHERWISE!
I hope the salary calculation will be a lot simpler now.
Alap Desai
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Hi Katyana,
Your help has been invaluable. I am grateful for your assistance in this regard. My questions are as follows:
1. I won't be having a vehicle, so the driver, petrol, and vehicle reimbursements are not applicable.
2. In the changed circumstances, can I have a higher allowance for communication, books and periodicals, or entertainment?
3. I would be grateful if you could suggest a structure with the least tax outgo.
Annual Monthly Taxable
BASIC SALARY 264,000 22,000 264,000
HOUSE RENT ALLOWANCE (HRA) 158,400 13,200 132,000
TRANSPORT ALLOWANCE 9,600 800
SPECIAL ALLOWANCE 33,000 2,750 2,750
Total (A) 465,000 38,750 398,750
COMMUNICATION REIMBURSEMENT 36,000 3,000 -
LTA 22,000 -
MEDICAL REIMBURSEMENT 15,000 1,250 -
BOOKS & PERIODICALS 12,000 1,000 -
Total (B) 85,000 7,083 -
Annual CTC (A + B) 550,000 45,833 398,750
Is the above split adequate with reference to Income Tax outgo, or can it be improved?
Thanks and regards,
Jitendra
From India, Calcutta
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Your help has been invaluable. I am grateful for your assistance in this regard. My questions are as follows:
1. I won't be having a vehicle, so the driver, petrol, and vehicle reimbursements are not applicable.
2. In the changed circumstances, can I have a higher allowance for communication, books and periodicals, or entertainment?
3. I would be grateful if you could suggest a structure with the least tax outgo.
Annual Monthly Taxable
BASIC SALARY 264,000 22,000 264,000
HOUSE RENT ALLOWANCE (HRA) 158,400 13,200 132,000
TRANSPORT ALLOWANCE 9,600 800
SPECIAL ALLOWANCE 33,000 2,750 2,750
Total (A) 465,000 38,750 398,750
COMMUNICATION REIMBURSEMENT 36,000 3,000 -
LTA 22,000 -
MEDICAL REIMBURSEMENT 15,000 1,250 -
BOOKS & PERIODICALS 12,000 1,000 -
Total (B) 85,000 7,083 -
Annual CTC (A + B) 550,000 45,833 398,750
Is the above split adequate with reference to Income Tax outgo, or can it be improved?
Thanks and regards,
Jitendra
From India, Calcutta
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Hi Katyana, The above post is a bit jumbled up. I am attaching the excel file. Kindly go through it and make the any change that you feel will enhance the take home component. Thanks. Jitendra
From India, Calcutta
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From India, Calcutta
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Hi, Can I have a standard format of Salary Annexure with fixed and variable components? nayagam
From India, Madras
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From India, Madras
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Hi All, Would be grateful if you guys could suggest if the salary breakup is good. Can it be tweaked? What would be the income tax outgo ? Thanx JRC
From India, Calcutta
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From India, Calcutta
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Friends,
I have to develop the package structure in my company. What is the method followed for dividing the salary into various components? For example, if we fix a salary of 6 lakhs, what should be the Basic, HRA, and other allowances? Are there any legal terms we need to comply with? Also, please help me with LEAVE structures. How many CLs and PLs will be allowed, and are there any statutory laws to be followed? I am working for a US consulting company in Hyderabad.
Regards, TSRao
From India, Hyderabad
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I have to develop the package structure in my company. What is the method followed for dividing the salary into various components? For example, if we fix a salary of 6 lakhs, what should be the Basic, HRA, and other allowances? Are there any legal terms we need to comply with? Also, please help me with LEAVE structures. How many CLs and PLs will be allowed, and are there any statutory laws to be followed? I am working for a US consulting company in Hyderabad.
Regards, TSRao
From India, Hyderabad
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Hi All,
This is Abdul. Could you please help me with breaking up the salaries? Currently, I am working in an ITES company in Bangalore. I need to break down the salary of a candidate whose CTC is 3.6 lakh per annum.
Could you please assist me with this?
Regards, Abdul
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This is Abdul. Could you please help me with breaking up the salaries? Currently, I am working in an ITES company in Bangalore. I need to break down the salary of a candidate whose CTC is 3.6 lakh per annum.
Could you please assist me with this?
Regards, Abdul
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SALARY SHEET CALCULATION.xls
Salary calculation.doc