Rolly, As i said earlier also, you are right ..we can fix a ceiling of Pf contri to Rs 780 pm in case of salary more than Rs 6500. Regards, Anu
From India, Calcutta
Acknowledge(0)
Amend(0)
5From India, Calcutta
Acknowledge(0)Amend(0)
Dear Rolly,
All legal implications are decided with respect to the Basic Salary of an Employee. At the same time, this part of the salary is pretty relaxing for an employee. Currently, most of the allowances are also taxable. Now, you have to think about which allowances you are going to introduce in the salary break-up.
I'm afraid that you would not be able to achieve the purpose you are trying to achieve because by decreasing the Basic salary of your Employees, they'll become demotivated (the company will shift the burden of Tax from itself to the Employees). Although allowances are satisfactory, they are not like Basic salary.
I would suggest that if you want to restructure the salary structure, apply it to the newcomers, not to the existing ones. This will create a fuss in your org.
Asif Naqvi
From United Arab Emirates, Sharjah
Acknowledge(0)Amend(0)
All legal implications are decided with respect to the Basic Salary of an Employee. At the same time, this part of the salary is pretty relaxing for an employee. Currently, most of the allowances are also taxable. Now, you have to think about which allowances you are going to introduce in the salary break-up.
I'm afraid that you would not be able to achieve the purpose you are trying to achieve because by decreasing the Basic salary of your Employees, they'll become demotivated (the company will shift the burden of Tax from itself to the Employees). Although allowances are satisfactory, they are not like Basic salary.
I would suggest that if you want to restructure the salary structure, apply it to the newcomers, not to the existing ones. This will create a fuss in your org.
Asif Naqvi
From United Arab Emirates, Sharjah
Acknowledge(0)Amend(0)
Hi,
Just to reply to your query, I don't see any statutory compliances in doing this. However, make sure the total salary should be above 10k; otherwise, you have to register with ESI. I do not think this is the best employee-friendly salary structure.
Thanks,
Manish
Acknowledge(0)Amend(0)
Just to reply to your query, I don't see any statutory compliances in doing this. However, make sure the total salary should be above 10k; otherwise, you have to register with ESI. I do not think this is the best employee-friendly salary structure.
Thanks,
Manish
Acknowledge(0)Amend(0)
hi maneesh after protracted discussions with forum members i feel there would be a complication involved as reducing basic also effects gratuity which is a statutory requirement. rolly
From India, New Delhi
Acknowledge(0)Amend(0)
From India, New Delhi
Acknowledge(0)Amend(0)
i hope u cant suddenly decrease the basic salary as it will afffect the entire benefits of the employees without the prior permission from the statutory authorities. Rukmane
From India, Madras
Acknowledge(0)Amend(0)
From India, Madras
Acknowledge(0)Amend(0)
Hi,
You should not reduce basic pay, but at the same time, during increments, new allowances can be added, and one can keep the basic pay intact. Furthermore, to keep the interests of employees in mind, try adding allowances first where they can avail maximum tax benefits. This will, to a certain extent, prevent them from raising concerns as their actual increment will be more than what they are currently receiving value-wise per month.
YOGESH
From India, Vadodara
Acknowledge(0)Amend(0)
You should not reduce basic pay, but at the same time, during increments, new allowances can be added, and one can keep the basic pay intact. Furthermore, to keep the interests of employees in mind, try adding allowances first where they can avail maximum tax benefits. This will, to a certain extent, prevent them from raising concerns as their actual increment will be more than what they are currently receiving value-wise per month.
YOGESH
From India, Vadodara
Acknowledge(0)Amend(0)
Thankyou Yogesh for your input. Could you please further advise that what are the kind of allowances (not reimbursement) that can be added so as to provide tax benifit. Rolly
From India, New Delhi
Acknowledge(0)Amend(0)
From India, New Delhi
Acknowledge(0)Amend(0)
we can remodel the salary structure only after the employees' consent other wise we can not reduce the basic. if we do unilaterally it will attarct legal action against the management
From India, Delhi
Acknowledge(0)Amend(0)
From India, Delhi
Acknowledge(0)Amend(0)
Rolly,
You can reduce your basic, and that will attract employees. Also, for that, you can add some allowances like Medical allowance (maximum of 15000 per annum), LTA, Uniform Allowance. This will help you in restructuring because basic is taxable. If you split that taxable basic into non-taxable allowances, your employees will be happy as taxable income is reducing.
From India, Visnagar
Acknowledge(0)Amend(0)
You can reduce your basic, and that will attract employees. Also, for that, you can add some allowances like Medical allowance (maximum of 15000 per annum), LTA, Uniform Allowance. This will help you in restructuring because basic is taxable. If you split that taxable basic into non-taxable allowances, your employees will be happy as taxable income is reducing.
From India, Visnagar
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Creating a Competitive Salary Structure.doc
Salary Structure.zip