Hi All,
Please, can anyone guide me on the topic of "How can I reduce the difference between CTC and take-home salary?"
In my company, the CTC is very high (e.g. 13000 pm CTC), but the employee's take-home is less (i.e., 9000 pm take-home). I want to increase the take-home as employee satisfaction is directly related to the same.
Thank you,
Bhavi
From India, Vadodara
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1Please, can anyone guide me on the topic of "How can I reduce the difference between CTC and take-home salary?"
In my company, the CTC is very high (e.g. 13000 pm CTC), but the employee's take-home is less (i.e., 9000 pm take-home). I want to increase the take-home as employee satisfaction is directly related to the same.
Thank you,
Bhavi
From India, Vadodara
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Hi,
It depends on your CTC structure. You can't just modify the structure like that as it needs your management approval. I am sure about your workings, but still, you cannot reduce the CTC. However, there is a possibility to increase the take-home pay by reducing the components that are considered for CTC calculations.
For example, if the basic pay is considered for all CTC calculations, then you can reduce the basic pay and increase the allowances. By doing this, your employees will have more take-home pay, but benefits like PF, Gratuity, etc., will be reduced.
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It depends on your CTC structure. You can't just modify the structure like that as it needs your management approval. I am sure about your workings, but still, you cannot reduce the CTC. However, there is a possibility to increase the take-home pay by reducing the components that are considered for CTC calculations.
For example, if the basic pay is considered for all CTC calculations, then you can reduce the basic pay and increase the allowances. By doing this, your employees will have more take-home pay, but benefits like PF, Gratuity, etc., will be reduced.
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Opting out of PF is one option where you can negotiate with your new joiners not to opt for PF in their salary. This would reduce costs for the company as there won't be an Employer PF amount to be allocated.
From India, Bangalore
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From India, Bangalore
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Hi According to my information CTC part cou ts in PA. also which include stuatory decuctory elements. Take home come after all your deduction is done.
From India, Pune
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From India, Pune
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Dear Bhavi,
I am not sure I understand (i) the problem, (ii) the need to introduce "Non-Taxable" Allowances to increase the take-home, and (iii) the reason for the difference of Rs 4,000/= plus between CTC and take-home.
You mention that the monthly CTC is Rs 13,000. This works out to an Annual CTC of Rs 1,56,000/=, which is below the taxable bracket. There would not be any Income Tax deduction taking place for such employees. Since no tax is deductible, the introduction of "Tax-Exempt" allowances will not make any difference.
An Illustrative Salary Stack could be worked as follows (I am mentioning tax-deductible amounts, even though in the case that you have cited, no Tax is payable because the annual income is below the Tax threshold.):
Basic Rs 5,200/= per month or Rs 62,400 per annum
HRA Rs 2,080/= per month or Rs 24,960/= per annum (Since Vadodara is a non-metro location only 40% of basic is eligible for a Tax deduction, which is computed as the minimum of three computations.)
Transport Allowance Rs 800/= per month or Rs 9,600/= per annum. (This is a tax-exempt allowance to the extent of Rs 9,600 per annum)
Special Allowance Rs 3,670/= per month or Rs 44,040 per annum. (This is salary paid which does not count towards PF)
Medical Reimbursement Rs 1,250/= per month or Rs 15,000 per annum. (This amount is exempt from tax against submission of bills)
Aggregate Rs 13,000/= per month or Rs 1,56,000/= per annum.
Provident Fund deduction (taken at 8.33%) is Rs 433/= per month or Rs 5,196/= per annum.
Since no tax is deductible, the Net Salary Payable to the employee would be Rs 13,000/=, less Rs 433/=, i.e., Rs 12,567/= per month or Rs 1,50,804/= per annum. This is 96.67% of the CTC.
While this gives an alternative, I still haven't been able to understand the three issues that I mentioned at the beginning of the post.
I hope this response is of help to you.
Regards,
Raju Bhatnagar
From India, Bangalore
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I am not sure I understand (i) the problem, (ii) the need to introduce "Non-Taxable" Allowances to increase the take-home, and (iii) the reason for the difference of Rs 4,000/= plus between CTC and take-home.
You mention that the monthly CTC is Rs 13,000. This works out to an Annual CTC of Rs 1,56,000/=, which is below the taxable bracket. There would not be any Income Tax deduction taking place for such employees. Since no tax is deductible, the introduction of "Tax-Exempt" allowances will not make any difference.
An Illustrative Salary Stack could be worked as follows (I am mentioning tax-deductible amounts, even though in the case that you have cited, no Tax is payable because the annual income is below the Tax threshold.):
Basic Rs 5,200/= per month or Rs 62,400 per annum
HRA Rs 2,080/= per month or Rs 24,960/= per annum (Since Vadodara is a non-metro location only 40% of basic is eligible for a Tax deduction, which is computed as the minimum of three computations.)
Transport Allowance Rs 800/= per month or Rs 9,600/= per annum. (This is a tax-exempt allowance to the extent of Rs 9,600 per annum)
Special Allowance Rs 3,670/= per month or Rs 44,040 per annum. (This is salary paid which does not count towards PF)
Medical Reimbursement Rs 1,250/= per month or Rs 15,000 per annum. (This amount is exempt from tax against submission of bills)
Aggregate Rs 13,000/= per month or Rs 1,56,000/= per annum.
Provident Fund deduction (taken at 8.33%) is Rs 433/= per month or Rs 5,196/= per annum.
Since no tax is deductible, the Net Salary Payable to the employee would be Rs 13,000/=, less Rs 433/=, i.e., Rs 12,567/= per month or Rs 1,50,804/= per annum. This is 96.67% of the CTC.
While this gives an alternative, I still haven't been able to understand the three issues that I mentioned at the beginning of the post.
I hope this response is of help to you.
Regards,
Raju Bhatnagar
From India, Bangalore
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Dear member,
The PF contribution may be up to 12%, which is better than 8.33%, as it is considered indirect income for the employee. PF accumulation is necessary for employees who have continuously contributed for 10 years to be eligible for a pension. Additionally, it is a non-taxable item to some extent.
Thank you.
From India, Visakhapatnam
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The PF contribution may be up to 12%, which is better than 8.33%, as it is considered indirect income for the employee. PF accumulation is necessary for employees who have continuously contributed for 10 years to be eligible for a pension. Additionally, it is a non-taxable item to some extent.
Thank you.
From India, Visakhapatnam
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Dear Member,
The amount that you have mentioned is a regular take-home salary. There would also be some annual components which would be paid to employees periodically, such as LTA, Bonus, etc. Count that too in the take-home, as these amounts may not be paid regularly but are paid on an annual basis, which according to me would bring up the take-home to around 11000/-.
To get more insight, it is suggested that you share with the forum a break-up of CTC so that other members can give their opinion on increasing the take-home.
Regards,
Preetam Deshpande
From India, Mumbai
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The amount that you have mentioned is a regular take-home salary. There would also be some annual components which would be paid to employees periodically, such as LTA, Bonus, etc. Count that too in the take-home, as these amounts may not be paid regularly but are paid on an annual basis, which according to me would bring up the take-home to around 11000/-.
To get more insight, it is suggested that you share with the forum a break-up of CTC so that other members can give their opinion on increasing the take-home.
Regards,
Preetam Deshpande
From India, Mumbai
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