Hi User,
My current salary break-up is enclosed here, but I am unsure if the calculation is correct. Could someone please assist me in ensuring the accuracy of the salary breakdown? I am uncertain about the precise calculations. Please find the attachment.
Thanks & Regards,
Ashok
From India, Chennai
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6My current salary break-up is enclosed here, but I am unsure if the calculation is correct. Could someone please assist me in ensuring the accuracy of the salary breakdown? I am uncertain about the precise calculations. Please find the attachment.
Thanks & Regards,
Ashok
From India, Chennai
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Dear Mr. Ashok Sundar,
The calculations as per the enclosed sheet look confusing. Additionally, please review the percentage of actuals as required.
Components A
Basic - 35% of 26K = 7800/-
HRA - 20% = 5200/-
City compensatory allowance - 30% = 7800/- (this includes Lunch, Medical, etc.)
Employers Contribution 12% of basic or Rs. 780/-, whichever is less = 630/-
Conveyance = 800/-
Special Allowance = 3770/-
Total = 26000/-
Components B
Less: Deductions
P.F. (Employees' Contribution 12% of Basic or Rs. 780/-, whichever is less) = 630/-
P.F. (Employers' Contribution 12% of Basic or Rs. 780/-, whichever is less) = 630/-
Professional Tax = 200/-
Total = 1760/-
Components A-B = 26000-1760 = 24240/-, which is your Net payable salary.
Performance Bonus or Ex-gratia in excess.
I hope this clarifies your query.
From India, Visakhapatnam
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The calculations as per the enclosed sheet look confusing. Additionally, please review the percentage of actuals as required.
Components A
Basic - 35% of 26K = 7800/-
HRA - 20% = 5200/-
City compensatory allowance - 30% = 7800/- (this includes Lunch, Medical, etc.)
Employers Contribution 12% of basic or Rs. 780/-, whichever is less = 630/-
Conveyance = 800/-
Special Allowance = 3770/-
Total = 26000/-
Components B
Less: Deductions
P.F. (Employees' Contribution 12% of Basic or Rs. 780/-, whichever is less) = 630/-
P.F. (Employers' Contribution 12% of Basic or Rs. 780/-, whichever is less) = 630/-
Professional Tax = 200/-
Total = 1760/-
Components A-B = 26000-1760 = 24240/-, which is your Net payable salary.
Performance Bonus or Ex-gratia in excess.
I hope this clarifies your query.
From India, Visakhapatnam
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Hi Ashok,
The salary breakup is not correct. There is no rule for the basic salary. Usually, companies keep it between 30-40% of your monthly salary. You can keep it at 35% as mentioned in Sharmila's reply, which makes your Basic to 9100. HRA has to be 50% of Basic, so the HRA will be 4550 (For exemptions, you need to do calculations as per the 3 rules of HRA exemption). Conveyance is 800. Medical is 1250 (if needed) (Given either as reimbursement or as a monthly allowance). PF is 12% of Basic, which will be 1092. Food Allowance ranges from 1500 to 2500. LTA is usually 1 month of Basic Salary for the whole year, but there is no hard and fast rule. It can be claimed 2 times in a 4-year block, given either as an allowance or reimbursement. Special Allowance = Gross Salary (26000) - (Basic + HRA + Conveyance + Medical + PF + Food Allowance + LTA). Net is Gross - PF - Professional Tax (if applicable in your state).
Thank you.
From India, Mumbai
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The salary breakup is not correct. There is no rule for the basic salary. Usually, companies keep it between 30-40% of your monthly salary. You can keep it at 35% as mentioned in Sharmila's reply, which makes your Basic to 9100. HRA has to be 50% of Basic, so the HRA will be 4550 (For exemptions, you need to do calculations as per the 3 rules of HRA exemption). Conveyance is 800. Medical is 1250 (if needed) (Given either as reimbursement or as a monthly allowance). PF is 12% of Basic, which will be 1092. Food Allowance ranges from 1500 to 2500. LTA is usually 1 month of Basic Salary for the whole year, but there is no hard and fast rule. It can be claimed 2 times in a 4-year block, given either as an allowance or reimbursement. Special Allowance = Gross Salary (26000) - (Basic + HRA + Conveyance + Medical + PF + Food Allowance + LTA). Net is Gross - PF - Professional Tax (if applicable in your state).
Thank you.
From India, Mumbai
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Dear Mr. Ashok Sundar,
HRA - 20% = 5200/-
Min HRA is to be 40% of Basic + DA. For Metro, it is 50%. So how does an HRA of 20% qualify?
City compensatory allowance all - 30% = 7800/- (this includes Lunch, Medical, etc). Employers' Contribution is 12% of basic or Rs. 780/-, whichever is less = 630/-. Conveyance = 800/-. Spl. All = 3770/-. Total = 26000/-.
City compensatory allowance is normally another name for Dearness Allowance, which is different from food/medical or other allowances. Instead of putting 3770 as special allowance, we can give 1250 as medical allowance and the remaining as special allowance.
Components B
Less: Deduction
P.F. ( Employees' Contribution 12% of Basic or Rs 780/-, whichever is less) = 630/-. P.F. ( Employers' Contribution 12% of Basic or Rs 780/-, whichever is less) = 630/-. Professional Tax = 200/-. Total = 1760/-. Components A-B = 26000-1760 = 24240/- is your Net payable salary. Performance Bonus or Ex-gratia in excess. Hope this clarifies your query.
You said Comp A (salary) - Comp B (deductions). Your deduction has Employers' PF contribution, which IS NOT deducted from Salary. This would mean the Employee is only giving both contributions. Also, note PT has a slab (This is at least for Mumbai, I may be wrong for other cities, seniors please advise). For up to 5000 basic, PT is 0. 5000 to 10,000 basic, PT is 150 pm. 10,000+ basic, PT is 200 pm for Mar-Jan and 300 for Feb. In this case, PT = 150 and not 200.
From India, Mumbai
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HRA - 20% = 5200/-
Min HRA is to be 40% of Basic + DA. For Metro, it is 50%. So how does an HRA of 20% qualify?
City compensatory allowance all - 30% = 7800/- (this includes Lunch, Medical, etc). Employers' Contribution is 12% of basic or Rs. 780/-, whichever is less = 630/-. Conveyance = 800/-. Spl. All = 3770/-. Total = 26000/-.
City compensatory allowance is normally another name for Dearness Allowance, which is different from food/medical or other allowances. Instead of putting 3770 as special allowance, we can give 1250 as medical allowance and the remaining as special allowance.
Components B
Less: Deduction
P.F. ( Employees' Contribution 12% of Basic or Rs 780/-, whichever is less) = 630/-. P.F. ( Employers' Contribution 12% of Basic or Rs 780/-, whichever is less) = 630/-. Professional Tax = 200/-. Total = 1760/-. Components A-B = 26000-1760 = 24240/- is your Net payable salary. Performance Bonus or Ex-gratia in excess. Hope this clarifies your query.
You said Comp A (salary) - Comp B (deductions). Your deduction has Employers' PF contribution, which IS NOT deducted from Salary. This would mean the Employee is only giving both contributions. Also, note PT has a slab (This is at least for Mumbai, I may be wrong for other cities, seniors please advise). For up to 5000 basic, PT is 0. 5000 to 10,000 basic, PT is 150 pm. 10,000+ basic, PT is 200 pm for Mar-Jan and 300 for Feb. In this case, PT = 150 and not 200.
From India, Mumbai
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Dear Mr. Ashok,
Ms. Ankita is correct. I would like to propose the salary breakdown as outlined below:
A.) Earnings:
- Basic (35% of Gross): 9100 (typically, companies set the basic between 30% to 40%)
- DA (30% of Basic): 2730
- HRA (50% of Basic + DA): 5915 (HRA is 50% of Basic & DA for metros and 40% for other cities)
- Conveyance: 800
- Employer's contribution in PF (12% of Basic or 780, whichever is lower): 780
- Medical Allowance: 1250
- Special & Other Allowance: 5425
Total Earnings: 26000
B.) Deductions:
- Employer's contribution in PF: 780
- PF deduction from Employee's Salary: 780
- Profession Tax: 150
Total Deductions: 1710
Net Salary: 24290
Seniors, please advise on any changes to the breakdown. Your input would be greatly appreciated.
Regards,
Prabhat
From India, Mumbai
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Ms. Ankita is correct. I would like to propose the salary breakdown as outlined below:
A.) Earnings:
- Basic (35% of Gross): 9100 (typically, companies set the basic between 30% to 40%)
- DA (30% of Basic): 2730
- HRA (50% of Basic + DA): 5915 (HRA is 50% of Basic & DA for metros and 40% for other cities)
- Conveyance: 800
- Employer's contribution in PF (12% of Basic or 780, whichever is lower): 780
- Medical Allowance: 1250
- Special & Other Allowance: 5425
Total Earnings: 26000
B.) Deductions:
- Employer's contribution in PF: 780
- PF deduction from Employee's Salary: 780
- Profession Tax: 150
Total Deductions: 1710
Net Salary: 24290
Seniors, please advise on any changes to the breakdown. Your input would be greatly appreciated.
Regards,
Prabhat
From India, Mumbai
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Apart from PT and PF deductions, I think TDS deductions are also there.... Most companies deduct TDS per month rather than deducting Tax for March’s salary to provide uniform salary every month
From India, Mumbai
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From India, Mumbai
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I think so, yes. Hence, normally, people do not give a huge amount for special allowance. They give food allowance - which is tax-free to the extent of the cost of lunch and 2 teas in a day for the working days of the month. The lump sum amount is around 1250-1500 per month.
Others give food coupons like Sodexo, which are fully tax-free, and the amount is included in the CTC as a food coupon. Try to provide as many tax-free benefits and allowances to the employees.
From India, Mumbai
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Others give food coupons like Sodexo, which are fully tax-free, and the amount is included in the CTC as a food coupon. Try to provide as many tax-free benefits and allowances to the employees.
From India, Mumbai
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Ankita,
Thanks for your quick and valuable reply. I will consider your suggestion in the future.
Again, can you update me regarding HRA? Is it compulsory to give 50% for metro cities and 40% for other cities, or does it vary from city to city? Is there any notification specifying that it should be 50% or 40%?
I need your help in updating the salary structure for my company starting from the accounting year...
Thanks,
Pratik
From India, Wardha
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Thanks for your quick and valuable reply. I will consider your suggestion in the future.
Again, can you update me regarding HRA? Is it compulsory to give 50% for metro cities and 40% for other cities, or does it vary from city to city? Is there any notification specifying that it should be 50% or 40%?
I need your help in updating the salary structure for my company starting from the accounting year...
Thanks,
Pratik
From India, Wardha
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[QUOTE=pratik.dofe;2037361]
Ankita,
Thanks for your quick and valuable reply. I will consider your suggestion in my future endeavors. Can you update me regarding HRA? Is it compulsory to give 50% for metro areas and 40% for other cities, or does it vary from city to city? Is there a specific notification stating that it should be 50% or 40%? I would appreciate your assistance in updating the salary structure for my company for the upcoming accounting year.
Thanks,
Pratik
Yes, it is a statutory compliance to have HRA at 40% (50% for metros). Companies are allowed to give more than that, but this percentage serves as the bare minimum. You can find more information on:
1. 5 things you should know about HRA - 5 things you should know about HRA - NDTVProfit.com
2. Tax liability - Meaning of House Rent Allowance and HRA Exemption Calculation
Type 'HRA' in the search bar of this site to access other relevant discussions on the topic. I hope this information is helpful.
From India, Mumbai
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Ankita,
Thanks for your quick and valuable reply. I will consider your suggestion in my future endeavors. Can you update me regarding HRA? Is it compulsory to give 50% for metro areas and 40% for other cities, or does it vary from city to city? Is there a specific notification stating that it should be 50% or 40%? I would appreciate your assistance in updating the salary structure for my company for the upcoming accounting year.
Thanks,
Pratik
Yes, it is a statutory compliance to have HRA at 40% (50% for metros). Companies are allowed to give more than that, but this percentage serves as the bare minimum. You can find more information on:
1. 5 things you should know about HRA - 5 things you should know about HRA - NDTVProfit.com
2. Tax liability - Meaning of House Rent Allowance and HRA Exemption Calculation
Type 'HRA' in the search bar of this site to access other relevant discussions on the topic. I hope this information is helpful.
From India, Mumbai
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