HI FRIENDS,
The importance of friendly salary package is seen now especially after the introduction of Fringe Benefit Tax.
All those employers who are interested to make available friendly salary package for their employees should prepare special salary package based on tax planning theme especially in the context of Fringe Benefit Tax payable by the employer.
In the first place, the HR friendly modules in the present scenario for employees and directors should cover the theme of
(1) Think and then ink the salary package of an employee
(2) Scrap superannuation fund contributions
(3) Pass on FBT to employees based on CTC concept
(4) Tailor-made different proposals.
The following guidelines will help every corporate taxpayer plan salary and perquisite packages for its employees;
A - Salary Module for Junior Employees .
For all junior employees, the salary and perquisites module should be very simple and easy to implement.
2. Except transport allowance, just add all payments to salary income. Do not give medical reimbursements – let it be added with salary or grant theme medical allowance so as to save FBT.
3. Pay zero FBT in respect of payments to junior employees and thus let 'gross salary' be taxed in their hands – still most of them will not pay any income-tax because their taxable income will be below Rs.1 to 1.35 lakhs (after tax deduction under section 80C).
B – Salary Module for Middle Level Executives
The theme: Mix and match FBT
1. Instead of making payment of 'salary', the total emoluments can be bifurcated so as to suffer a little tax by the employee on perquisites but very less FBT.
2. Consider the following in drafting this module:
• Transport Allowance.
• .MEDICAL REIMBURSEMENT UPTO RS. 15 K PER ANNUM
• FOOD COUPONS
• .LTA AS PER LAW.
(C- Salary Module for Senior Level Executives
1. The theme: A little more pain to bring lower perquisite taxation and increase FBT payout which may be considered in CTC
2. Consider the following:
• Transport Allowance.
• .MEDICAL REIMBURSEMENT UPTO RS. 15 K PER ANNUM
• FOOD COUPONS
• Reimbursements of food expenses in club/hotel
• HRA OR RENT FREE ACCOMODATION
• LTA AS PER LAW.
• UNIFORM ALLOWANCE
• REIMBURSEMENT OF CAR EXPENSES OR CONVEYANCE ALLOW
BY APPLYING THESE U CAN WORKOUT THE BREAKUPS AT DIFFERENT LEVELS
KATYANA
From India, Gurgaon
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36The importance of friendly salary package is seen now especially after the introduction of Fringe Benefit Tax.
All those employers who are interested to make available friendly salary package for their employees should prepare special salary package based on tax planning theme especially in the context of Fringe Benefit Tax payable by the employer.
In the first place, the HR friendly modules in the present scenario for employees and directors should cover the theme of
(1) Think and then ink the salary package of an employee
(2) Scrap superannuation fund contributions
(3) Pass on FBT to employees based on CTC concept
(4) Tailor-made different proposals.
The following guidelines will help every corporate taxpayer plan salary and perquisite packages for its employees;
A - Salary Module for Junior Employees .
For all junior employees, the salary and perquisites module should be very simple and easy to implement.
2. Except transport allowance, just add all payments to salary income. Do not give medical reimbursements – let it be added with salary or grant theme medical allowance so as to save FBT.
3. Pay zero FBT in respect of payments to junior employees and thus let 'gross salary' be taxed in their hands – still most of them will not pay any income-tax because their taxable income will be below Rs.1 to 1.35 lakhs (after tax deduction under section 80C).
B – Salary Module for Middle Level Executives
The theme: Mix and match FBT
1. Instead of making payment of 'salary', the total emoluments can be bifurcated so as to suffer a little tax by the employee on perquisites but very less FBT.
2. Consider the following in drafting this module:
• Transport Allowance.
• .MEDICAL REIMBURSEMENT UPTO RS. 15 K PER ANNUM
• FOOD COUPONS
• .LTA AS PER LAW.
(C- Salary Module for Senior Level Executives
1. The theme: A little more pain to bring lower perquisite taxation and increase FBT payout which may be considered in CTC
2. Consider the following:
• Transport Allowance.
• .MEDICAL REIMBURSEMENT UPTO RS. 15 K PER ANNUM
• FOOD COUPONS
• Reimbursements of food expenses in club/hotel
• HRA OR RENT FREE ACCOMODATION
• LTA AS PER LAW.
• UNIFORM ALLOWANCE
• REIMBURSEMENT OF CAR EXPENSES OR CONVEYANCE ALLOW
BY APPLYING THESE U CAN WORKOUT THE BREAKUPS AT DIFFERENT LEVELS
KATYANA
From India, Gurgaon
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HI Vivek,
FBT is a part of employees,s CTC, so employee can borne the tax.Yes u can introduce the choice pay to your employees, because by doing so, they can opt the reimbursements of their choice and save tax .
In salary breakup the term spl allowance means--- THE REMAINING BALANCE AMOUNT OF SALARY. So if somebody wants to have more in hand salary then we can put the reimbursements amount in that heading.(if he is not willing to take reimbursements).
I do hope that i have clarified your query.
katyana
From India, Gurgaon
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FBT is a part of employees,s CTC, so employee can borne the tax.Yes u can introduce the choice pay to your employees, because by doing so, they can opt the reimbursements of their choice and save tax .
In salary breakup the term spl allowance means--- THE REMAINING BALANCE AMOUNT OF SALARY. So if somebody wants to have more in hand salary then we can put the reimbursements amount in that heading.(if he is not willing to take reimbursements).
I do hope that i have clarified your query.
katyana
From India, Gurgaon
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Hi Katyana,
Your above suggestion for friendly salary package is fine and really appreciable for your thoughts.
Request you to please revert with the sample spread sheet of the format with necessary calculation steps and formulas.
Please do not think the expectation is too much.
Regards,
Bhaskar
From India, Bangalore
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Your above suggestion for friendly salary package is fine and really appreciable for your thoughts.
Request you to please revert with the sample spread sheet of the format with necessary calculation steps and formulas.
Please do not think the expectation is too much.
Regards,
Bhaskar
From India, Bangalore
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HI Seniors,
Are there any rules/law of fixing scale of senior management or it depends upon company's profitabliity and capacity??
Also, same on salary break ups...
e.g.
HRA in my company is 50% of Basic
but in Metro city most of the company has 40% of the basic...
Can you give me some idea and the details of salary brreak up format please,
From India, Mumbai
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Are there any rules/law of fixing scale of senior management or it depends upon company's profitabliity and capacity??
Also, same on salary break ups...
e.g.
HRA in my company is 50% of Basic
but in Metro city most of the company has 40% of the basic...
Can you give me some idea and the details of salary brreak up format please,
From India, Mumbai
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Hi ram,
No there is no such law of fixing salary structure of senior management. It totally depends upon company,s internal policy of compensation.
The percentage of basic varies from 30-60% of CTC. There is no such hard and fast rule on this.
For salary breakup format , pl find the attachement which we are using in our company
KATYANA
From India, Gurgaon
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No there is no such law of fixing salary structure of senior management. It totally depends upon company,s internal policy of compensation.
The percentage of basic varies from 30-60% of CTC. There is no such hard and fast rule on this.
For salary breakup format , pl find the attachement which we are using in our company
KATYANA
From India, Gurgaon
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Thank you Katyana, information is most useful. Do you think we can also add Child/Children Education for senior members as well in the salary structure? regards Sourabh
From India, Delhi
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From India, Delhi
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(Fact Checked)-The addition of Child/Children Education for senior members in the salary structure is a valid consideration to enhance benefits and attract talent. (1 Acknowledge point)
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THNX A LOTT...FOR SHARING..... PLS KEEP IT UP IN FUTURE ALSO...WHEN INDUSTRY INVENTS NEW COMPONENTS.... REGARDS NAMITABH :):):):):)
From India, Pune
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From India, Pune
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Dear Katyana, Your suggestion is superb, and could you plz throw light on LTA component, when u say as per law? is this the max. limit you r talking about? Plz advise. Sashmita
From India, Delhi
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From India, Delhi
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Hi sashmita, Pl go through my posting — — — — -10 THINGS U SHOULD KNOW ABOUT LTA. U WILL GET THE ANSWER OF YOYR QUERY. KATYANA
From India, Gurgaon
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From India, Gurgaon
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Thank you, friends. Please, if you can help in detecting any salary leakage that generally happens at the end of every month. For example, if the payroll cycle is from the 21st to the 20th, and by the 28th, payroll is usually completed. Now, if any employee is on leave or in suspension mode for a week and then tenders their resignation on the 29th, how could we prevent these instances of salary leakage? If you have any format for addressing this issue, I kindly request you to share it with me as urgently needed. Thank you, Zia Jafri, Gurgaon.
From India, New Delhi
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From India, New Delhi
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(Fact Checked)-The issue of preventing salary leakage due to employees leaving or being on leave is crucial. To address this, timely communication and process controls are essential. Regularly updating and monitoring leave records can help prevent such leakages effectively. (1 Acknowledge point)
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CiteHR.AI
(Fact Checked)-Based on the latest laws and practices, the salary break-up percentages like HRA can vary based on company policy and city location, not on laws. Customization is common. (1 Acknowledge point)