Is it possible that my net take-home is lower than my basic salary? I have not taken any leaves, nor do I have any loan against my name. As far as I know, it is not possible, but my HR is challenging that it is possible.
From India, Kolkata
From India, Kolkata
Mahib_ul: Basic here means the basic component of your salary structure right? If that is so, then no.
From India, Mumbai
92From India, Mumbai
Yes, if a monthly salary is 25,000/- and you have joined in the middle of the month (even a day less than a month or worked days with acceptable leave, etc.), the net salary is certainly less than your basic. However, the situation could change if you have served for a whole month; the net salary will not be less than this, provided you have taken a loan, LOP, etc. Anyway, you have a great mind in HR, so be careful.
From India, Arcot
From India, Arcot
Deductions from salary cannot exceed 50% of the gross amount (or 75% if the deduction includes payments to an employee cooperative). If your basic salary is more than 50% of the gross salary and the deduction is at its maximum, your take-home pay can fall below the basic amount.
From India, Mumbai
From India, Mumbai
Are you a beginner or a senior? A wild guess, supposing you were absent for a long period, naturally, your earnings will be meager. At the same time, you will have other deductions such as official quarters or leased accommodation provided by the company, HR-related deductions, court attachments, other recoveries (all fixed amounts), if any, etc. These aggregated deductions may exceed your fixed basic salary, resulting in your net take-home pay being reduced.
From India, Bangalore
From India, Bangalore
Dear Can u provide me your gross Salary so that we can give correct The possible is IT deduction, PF/ESI/WC or any other statutory deduction Can happen
From India, Hyderabad
From India, Hyderabad
A rigid reduction of salary by $8500 cannot result in a decrease of take-home salary by $500, even considering the new PF rules. The impact of PF increase is limited to ₹1020 (or ₹1800 if you were earlier not covered by PF).
You do not need any law or rule in the act to say this is not possible. You got a salary slip, I hope. Check the comparison of components. What appears to have been done is to restructure the salary components to avoid PF. Then this is something for which the company can get into severe trouble.
From India, Mumbai
You do not need any law or rule in the act to say this is not possible. You got a salary slip, I hope. Check the comparison of components. What appears to have been done is to restructure the salary components to avoid PF. Then this is something for which the company can get into severe trouble.
From India, Mumbai
can you give the details of the salary breakup for comparison i.e. the previous one and the current one to the forum so as to give you appropriate view.
From India, Ahmadabad
From India, Ahmadabad
Saswata da,
Rectify me if I am wrong... Net salary can be lower than take-home salary. I am saying this from my practical experience as a management professional, competent in laws, accounting, and financial audits.
For example, if someone has asked management to deduct more in the PF account contribution, then funds MAY BE transferred from basic into the PF account, thus making the net salary lower than the basic.
Again, suppose there is some item of salary for which management has done TAX DEDUCTION at the source, then the net salary may become lower than the gross.
Many loopholes are there. I think we should advise the guy to provide the details of the PAY SLIP so that we can give a concrete reply. Alternatively, we can advise the guy to meet a Chartered Accountant or Company Secretary in practice, provide him with details of his salary for a minimum of 1 year, and then request him to provide a certificate of his analysis. Thus, if there is any mistake, the CA/CS can detect and point it out, and the certificate must be ratified by the membership number of CA/CS with ICAI/ICSI and signature.
An experienced auditor knows what to write in such a certificate. I hope you understood.
And I am pretty sure HR can't challenge a qualified auditor without a valid reason(s). Thus, either explain the payslip to the employee or accept the ratified certificate of a qualified CA. A Gentleman's solution.
Thanks and Regards,
Sovik B
From India, Mumbai
Rectify me if I am wrong... Net salary can be lower than take-home salary. I am saying this from my practical experience as a management professional, competent in laws, accounting, and financial audits.
For example, if someone has asked management to deduct more in the PF account contribution, then funds MAY BE transferred from basic into the PF account, thus making the net salary lower than the basic.
Again, suppose there is some item of salary for which management has done TAX DEDUCTION at the source, then the net salary may become lower than the gross.
Many loopholes are there. I think we should advise the guy to provide the details of the PAY SLIP so that we can give a concrete reply. Alternatively, we can advise the guy to meet a Chartered Accountant or Company Secretary in practice, provide him with details of his salary for a minimum of 1 year, and then request him to provide a certificate of his analysis. Thus, if there is any mistake, the CA/CS can detect and point it out, and the certificate must be ratified by the membership number of CA/CS with ICAI/ICSI and signature.
An experienced auditor knows what to write in such a certificate. I hope you understood.
And I am pretty sure HR can't challenge a qualified auditor without a valid reason(s). Thus, either explain the payslip to the employee or accept the ratified certificate of a qualified CA. A Gentleman's solution.
Thanks and Regards,
Sovik B
From India, Mumbai
Hi Mahib,
Most companies fix the Gross Salary, and 40 to 50% of it will be the Basic salary to reduce PF/ESI/Bonus/Gratuity liability. In your case, the Basic salary, which was $6,500 earlier, was revised to $15,000.
Please let us know:
1. What was your Gross Salary earlier?
2. What is your Gross Salary after the revision (i.e., when your Basic was revised from $6,500 to $15,000)?
This information may help us understand the motive behind revising the Basic to more than double the earlier amount. Is it to avoid PF/ESI, etc.? Please provide a breakdown of deductions to understand the calculation of take-home pay and how the increase in Basic has resulted in a reduction of take-home pay.
Email: c.neyimkhan@gmail.com
Kindly provide the requested details for further analysis.
Thank you.
From India, Bangalore
Most companies fix the Gross Salary, and 40 to 50% of it will be the Basic salary to reduce PF/ESI/Bonus/Gratuity liability. In your case, the Basic salary, which was $6,500 earlier, was revised to $15,000.
Please let us know:
1. What was your Gross Salary earlier?
2. What is your Gross Salary after the revision (i.e., when your Basic was revised from $6,500 to $15,000)?
This information may help us understand the motive behind revising the Basic to more than double the earlier amount. Is it to avoid PF/ESI, etc.? Please provide a breakdown of deductions to understand the calculation of take-home pay and how the increase in Basic has resulted in a reduction of take-home pay.
Email: c.neyimkhan@gmail.com
Kindly provide the requested details for further analysis.
Thank you.
From India, Bangalore
There may be rare chances of such a case, as told by Mr. Sovik. If the Basic is contributing 99% of the Gross Salary after revision and the other component contributes 1%, there are chances where the Net Take-Home salary can be lower than Basic. However, an appropriate view can be given only after looking at the comparison of the current and previous salary structure. It would be wrong to give vague answers in general.
From India, Ahmadabad
From India, Ahmadabad
Payment of Wages Act specifies that the total deduction from gross wages cannot exceed 50% of gross salary. So, for the in-hand to go down beyond that, the basic must be more than 50% of gross. However, the OP clarified that his basic was 6500, and now it's 15000, but his take-home has come down from 13000 to 12500. This is definitely not right. It appears that the management is trying to restructure the salary to avoid PF or is deducting increased PF, including employer's contribution, from employees' gross salary. Both of which are illegal.
I cannot think of any circumstance in which with an increase in basic pay the gross will reduce. It appears to be a case of pure manipulation. However, as you rightly pointed out, the OP does not seem to be interested in sharing his payslip (before and after the salary restructuring), so we are only doing an academic exercise to improve our knowledge.
From India, Mumbai
I cannot think of any circumstance in which with an increase in basic pay the gross will reduce. It appears to be a case of pure manipulation. However, as you rightly pointed out, the OP does not seem to be interested in sharing his payslip (before and after the salary restructuring), so we are only doing an academic exercise to improve our knowledge.
From India, Mumbai
Dear,
Due to the increase in wages beyond 10,000, the query is beyond the scope of the Payment of Wages Act under section 1(6). Even under section 7, deductions of up to 75 percent can be made. There does not appear to be any other law governing the impermissibility of payment of wages below the basic pay, except in cases of attachment by the court under the Code of Civil Procedure (CPC).
From India, New Delhi
Due to the increase in wages beyond 10,000, the query is beyond the scope of the Payment of Wages Act under section 1(6). Even under section 7, deductions of up to 75 percent can be made. There does not appear to be any other law governing the impermissibility of payment of wages below the basic pay, except in cases of attachment by the court under the Code of Civil Procedure (CPC).
From India, New Delhi
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