Hi,
The Statutory Bonus is paid to employees drawing Basic Salary below Rs. 10,000/- per month. For companies declaring a Minimum Bonus of 8.33% (Min. 8.33%, Max. 20%, anything over this is ex gratia), they will have to pay 8.33% of Rs. 3500/-, which amounts to Rs. 292 per month. Employees whose Basic salary is below Rs. 3500/- need to pay 8.33% on the actual basic. However, this is subject to a minimum Bonus amount. Since this is an annual compulsory payment, it can very well be taken as part of CTC as most of the companies are paying Bonus.
Regards,
Subrato:dry:
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2The Statutory Bonus is paid to employees drawing Basic Salary below Rs. 10,000/- per month. For companies declaring a Minimum Bonus of 8.33% (Min. 8.33%, Max. 20%, anything over this is ex gratia), they will have to pay 8.33% of Rs. 3500/-, which amounts to Rs. 292 per month. Employees whose Basic salary is below Rs. 3500/- need to pay 8.33% on the actual basic. However, this is subject to a minimum Bonus amount. Since this is an annual compulsory payment, it can very well be taken as part of CTC as most of the companies are paying Bonus.
Regards,
Subrato:dry:
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Hi,
Q: 1) I joined the company in 2005, wherein at present I am working. It was not mentioned in my appointment letter while joining about including a bonus in the CTC.
After the last year's appraisals, a handsome amount (around 22k) was shown in my appraisal letter and revised CTC as "Performance allowance," which again was obtainable if I will work for the company for the next 6 months.
Now at the time of this year's appraisal, my CTC is showing a deduction (i.e., an adjustment) in the performance allowance, i.e., 22k LESS bonus. This means the amount that was shown last year as a performance allowance, i.e., 22k, is not really obtainable by me this year, as the company has already shown an adjustment of the bonus out of it (which bonus I had already received during last Diwali). How can a bonus given be adjusted or deducted from any of the allowances I am liable to get?
Q: 2) If someone is provided with company accommodation on a chargeable basis, does HRA appear or is it applicable legally in the CTC?
We have a practice of the following in our company:
- House is provided by the company.
- HRA is not shown in the CTC.
- House valuation is shown as a "perquisite" in the gross salary.
- ONLY the rent deducted from the salary is deducted from the house valuation.
- Still, the Gross salary shows an increase of 32 to 34K (because of the perquisite valuation), which increases my income tax.
Now during this year's appraisals, HRA is shown in the CTC under a different head, but at the same time, house rent is "DOUBLED".
Please guide me on whether company accommodation or outside rented accommodation will be helpful for me to save money.
Regards,
Chef
From India, Vadodara
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Q: 1) I joined the company in 2005, wherein at present I am working. It was not mentioned in my appointment letter while joining about including a bonus in the CTC.
After the last year's appraisals, a handsome amount (around 22k) was shown in my appraisal letter and revised CTC as "Performance allowance," which again was obtainable if I will work for the company for the next 6 months.
Now at the time of this year's appraisal, my CTC is showing a deduction (i.e., an adjustment) in the performance allowance, i.e., 22k LESS bonus. This means the amount that was shown last year as a performance allowance, i.e., 22k, is not really obtainable by me this year, as the company has already shown an adjustment of the bonus out of it (which bonus I had already received during last Diwali). How can a bonus given be adjusted or deducted from any of the allowances I am liable to get?
Q: 2) If someone is provided with company accommodation on a chargeable basis, does HRA appear or is it applicable legally in the CTC?
We have a practice of the following in our company:
- House is provided by the company.
- HRA is not shown in the CTC.
- House valuation is shown as a "perquisite" in the gross salary.
- ONLY the rent deducted from the salary is deducted from the house valuation.
- Still, the Gross salary shows an increase of 32 to 34K (because of the perquisite valuation), which increases my income tax.
Now during this year's appraisals, HRA is shown in the CTC under a different head, but at the same time, house rent is "DOUBLED".
Please guide me on whether company accommodation or outside rented accommodation will be helpful for me to save money.
Regards,
Chef
From India, Vadodara
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Hi Subodh,
When a company provides accommodation, it is treated as CLA (Company Leased Accommodation), which is considered a Perquisite, and the value of such perquisite has to be accounted for at the time of computation of your income tax. It gets calculated at 15% of the Gross Earnings and the actual rent (CLA amount) paid. The least of the two is exempted from tax.
It is highly recommended to opt for HRA instead of CLA, as it would be much more cost-effective compared to the CLA option. By availing HRA, you would be able to save more on tax as it allows full exemption, subject to the rent amount paid.
Please find enclosed the CLA Calculation sheet. Hope this helps.
Regards
From India, Mumbai
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When a company provides accommodation, it is treated as CLA (Company Leased Accommodation), which is considered a Perquisite, and the value of such perquisite has to be accounted for at the time of computation of your income tax. It gets calculated at 15% of the Gross Earnings and the actual rent (CLA amount) paid. The least of the two is exempted from tax.
It is highly recommended to opt for HRA instead of CLA, as it would be much more cost-effective compared to the CLA option. By availing HRA, you would be able to save more on tax as it allows full exemption, subject to the rent amount paid.
Please find enclosed the CLA Calculation sheet. Hope this helps.
Regards
From India, Mumbai
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Hi Subodh,
Mukul has already answered your second query, and he is absolutely right. Regarding your first query, I am a bit confused about the question. Please be informed that any amount once mentioned in the CTC has to be paid by the employer to the employee unless and until there are clauses mentioned in the CTC letter or the appointment letter; hence, check the same.
Once your CTC says that there is a performance bonus involved, the company has to pay that if there are no clauses stating that the bonus will be only paid under certain conditions. However, since you received the amount last year and this year the deduction was mentioned in your revised CTC, you can't take any action against the company. You must have changed the company since such a practice is not a good sign.
Regards,
AJ
From India, Thana
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Mukul has already answered your second query, and he is absolutely right. Regarding your first query, I am a bit confused about the question. Please be informed that any amount once mentioned in the CTC has to be paid by the employer to the employee unless and until there are clauses mentioned in the CTC letter or the appointment letter; hence, check the same.
Once your CTC says that there is a performance bonus involved, the company has to pay that if there are no clauses stating that the bonus will be only paid under certain conditions. However, since you received the amount last year and this year the deduction was mentioned in your revised CTC, you can't take any action against the company. You must have changed the company since such a practice is not a good sign.
Regards,
AJ
From India, Thana
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Dear AJ,
Thank you for the reply. I will rephrase my question for you. For your information, I have not changed companies; I have been working since 2005 until now.
In the last year's CTC, Rs. 22000 was shown as Performance Allowance, to be paid during this year. There was a condition that if I continue working for a further six months, I am entitled to receive that 22k. I have continued working.
Now, in this year's CTC, the company has deducted/adjusted last year's bonus, which reduces my Performance Allowance by around 8400/-. In other words, the bonus paid to me last year has been deducted from my Performance Allowance, showing an adjustment in the total amount.
Am I not entitled to receive the full amount of Rs. 22000?
Regards,
Subodh
From India, Vadodara
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Thank you for the reply. I will rephrase my question for you. For your information, I have not changed companies; I have been working since 2005 until now.
In the last year's CTC, Rs. 22000 was shown as Performance Allowance, to be paid during this year. There was a condition that if I continue working for a further six months, I am entitled to receive that 22k. I have continued working.
Now, in this year's CTC, the company has deducted/adjusted last year's bonus, which reduces my Performance Allowance by around 8400/-. In other words, the bonus paid to me last year has been deducted from my Performance Allowance, showing an adjustment in the total amount.
Am I not entitled to receive the full amount of Rs. 22000?
Regards,
Subodh
From India, Vadodara
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Hi Subodh, Will this amount be paid to you once you leave the company. Anyways have to inform you that its a very bad practise followed by your company. Regards, AJ
From India, Thana
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From India, Thana
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Hi all,
I am Yogesh. What are the total facilities and benefits under different labor laws that are made available to contract workers? If possible, a compilation of the same in a scientific manner is required.
From India, Bhilai
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I am Yogesh. What are the total facilities and benefits under different labor laws that are made available to contract workers? If possible, a compilation of the same in a scientific manner is required.
From India, Bhilai
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Dear All,
This is really an interesting and valuable discussion going on. In my company, one of the clients is asking to distribute the Annual statutory bonus (Rs. 3500/- i.e. min. 8.33%) as "Advance Bonus Payout" (Rs. 292/-) in monthly salary components with a commitment to its monthly payout to employees as a part of Gross salary and its mention in monthly salary slips. Your advice is requested on whether this is feasible.
Regards,
Oindrila
From India, Calcutta
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This is really an interesting and valuable discussion going on. In my company, one of the clients is asking to distribute the Annual statutory bonus (Rs. 3500/- i.e. min. 8.33%) as "Advance Bonus Payout" (Rs. 292/-) in monthly salary components with a commitment to its monthly payout to employees as a part of Gross salary and its mention in monthly salary slips. Your advice is requested on whether this is feasible.
Regards,
Oindrila
From India, Calcutta
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Hi Oindrilla,
Advance payment, especially in the form of a monthly salary slip, is not desirable. It should be paid after declaring the balance sheet. Legally, you can show it as an advance against a bonus, but the chances of misinterpretation are very high. It is not advised.
Siva
From India, Chennai
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Advance payment, especially in the form of a monthly salary slip, is not desirable. It should be paid after declaring the balance sheet. Legally, you can show it as an advance against a bonus, but the chances of misinterpretation are very high. It is not advised.
Siva
From India, Chennai
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Dear Subodh,
What were the exact terminologies used? In other words, can you reproduce the exact clause on performance bonus? We normally draft it in such a way that it is not payable in full. Unless we see the complete clause on this, we cannot say whether it is legally payable or not.
Siva
From India, Chennai
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What were the exact terminologies used? In other words, can you reproduce the exact clause on performance bonus? We normally draft it in such a way that it is not payable in full. Unless we see the complete clause on this, we cannot say whether it is legally payable or not.
Siva
From India, Chennai
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