Hi,
Have been seeing this forum since last 3 days and have got so much information that I never thought was required or of help. Thanks for the community of internet helping people.
I want the format of salary breakup that I can device for employees of company. According the instructions given to me I have to have the following components: Basic, HRA, LTA, Allowance for phone, Allowance for Internet, Medical, Conveyance and DA and if it is not required then we do not want PF.
I am very new to all this and do not understand anythign whatsoever. Can someone please help me out on the following queries:
1. Break up for salaries around 96000 per annum.
2. Is anything to be deducted from companies side with this salary.
3. The company has a leave policy under which leave encashment is also provided (should that be included in the total salary).
4. Is PF Deduction compulsary for companies.
5. If yes how much should be deducted and is there any condition for its reimbursement once the employee leaves.
6. We want to device the structure such that if the salaries of employees is increased and they come under tax brackets they are not burdened a lot and we are not required to change our structures.
7. Any tax to be paid from the employer or the employee side on this structure?
I am sorry for too many questions to be asked but I want this to be fixed very very urgently. It would be great if someone could help me design the salary slip accordingly.
From India, Indore
6Have been seeing this forum since last 3 days and have got so much information that I never thought was required or of help. Thanks for the community of internet helping people.
I want the format of salary breakup that I can device for employees of company. According the instructions given to me I have to have the following components: Basic, HRA, LTA, Allowance for phone, Allowance for Internet, Medical, Conveyance and DA and if it is not required then we do not want PF.
I am very new to all this and do not understand anythign whatsoever. Can someone please help me out on the following queries:
1. Break up for salaries around 96000 per annum.
2. Is anything to be deducted from companies side with this salary.
3. The company has a leave policy under which leave encashment is also provided (should that be included in the total salary).
4. Is PF Deduction compulsary for companies.
5. If yes how much should be deducted and is there any condition for its reimbursement once the employee leaves.
6. We want to device the structure such that if the salaries of employees is increased and they come under tax brackets they are not burdened a lot and we are not required to change our structures.
7. Any tax to be paid from the employer or the employee side on this structure?
I am sorry for too many questions to be asked but I want this to be fixed very very urgently. It would be great if someone could help me design the salary slip accordingly.
From India, Indore
1. Rs. 96000/- pa comes to Rs. 8000/- pm.
2. If you want his PF to be deducted than you can keep his salary to minimum of 60% of gross salary, else you should keep his salary more than Rs. 6500/- as above Rs. 6500/- basic you need not to pay PF provided you fill in the form no 11.
3. Rest of the amount you can divide in the other heads of salary but keeping in mind the taxable impact of such allowances.
4. You can not add amount for Leave Encashment in his total package as it is not certain how much leaves would be balance at that time. However you can make a provision for that.
5. on Rs. 96000/- there would not be any tax implication.
I think that your doubts would be cleared to some extent.
Thanks
Aditya Gupta
From India, Delhi
2. If you want his PF to be deducted than you can keep his salary to minimum of 60% of gross salary, else you should keep his salary more than Rs. 6500/- as above Rs. 6500/- basic you need not to pay PF provided you fill in the form no 11.
3. Rest of the amount you can divide in the other heads of salary but keeping in mind the taxable impact of such allowances.
4. You can not add amount for Leave Encashment in his total package as it is not certain how much leaves would be balance at that time. However you can make a provision for that.
5. on Rs. 96000/- there would not be any tax implication.
I think that your doubts would be cleared to some extent.
Thanks
Aditya Gupta
From India, Delhi
Thanks for the quick help.
Can you please explain what this means
***********
2. If you want his PF to be deducted than you can keep his salary to minimum of 60% of gross salary, else you should keep his salary more than Rs. 6500/- as above Rs. 6500/- basic you need not to pay PF provided you fill in the form no 11.
************
My interpretation is that if I keep the basic to be less than 6500 it is an obligation that I deduct PF from the employee. If that is the case then
- what is the percent of PF to be deducted
- and also what is the procedure of return of the PF once the employee leaves?
Can someone also help me divide the remaining amount in the other heads with PF and also without provision of PF.
Thanks for the informative help..
From India, Indore
Can you please explain what this means
***********
2. If you want his PF to be deducted than you can keep his salary to minimum of 60% of gross salary, else you should keep his salary more than Rs. 6500/- as above Rs. 6500/- basic you need not to pay PF provided you fill in the form no 11.
************
My interpretation is that if I keep the basic to be less than 6500 it is an obligation that I deduct PF from the employee. If that is the case then
- what is the percent of PF to be deducted
- and also what is the procedure of return of the PF once the employee leaves?
Can someone also help me divide the remaining amount in the other heads with PF and also without provision of PF.
Thanks for the informative help..
From India, Indore
Hi..
You can go ahead with this format..
Basic 3000
HRA 1200
LTA 800
Mobile 400
Internet 200
DA 1500
Conveyance 900
Gross/Month 8000
Annual Fixed Cost 96000
As the number of employee is only 8, so there is no need of PF and ESI contribution.
Hope it will be fine with you.
Regards,
Amit Seth.
From India, Ahmadabad
You can go ahead with this format..
Basic 3000
HRA 1200
LTA 800
Mobile 400
Internet 200
DA 1500
Conveyance 900
Gross/Month 8000
Annual Fixed Cost 96000
As the number of employee is only 8, so there is no need of PF and ESI contribution.
Hope it will be fine with you.
Regards,
Amit Seth.
From India, Ahmadabad
Hi!
Rs. 96,000.00 is Annual salary, thus Rs. 8000.00 is monthly salary. At this level in my opinion PF should be given, but since you have only 8 employees at the moment you can actually do away with this.
The break up, which would be tax beneficial to employees cauld be as follows:
BAsic : 50% of Gross i.e Rs. 4000.00
HRA: 50 % of Basic Rs. 2000.00
Conveyance Allowance Rs. 800.00
Medical Allowance Rs. 1200.00
IN the above mentioned breakup, conveyance allowance and medical allowance is totally exempted upto a maximum of Rs. 800 and Rs 1250 pm, respectively.
On HRA also an employee will get expemtions incase he is staying in a rented accommodation as per the rules.
More than anything else, I would like to add, you may have any structure they will not attract any tax since the threshold limit for tax is Rs. 1,10,000.00 for males and 1,45,000. for ladies.
Regards
Madhumita
From India, Guwahati
Rs. 96,000.00 is Annual salary, thus Rs. 8000.00 is monthly salary. At this level in my opinion PF should be given, but since you have only 8 employees at the moment you can actually do away with this.
The break up, which would be tax beneficial to employees cauld be as follows:
BAsic : 50% of Gross i.e Rs. 4000.00
HRA: 50 % of Basic Rs. 2000.00
Conveyance Allowance Rs. 800.00
Medical Allowance Rs. 1200.00
IN the above mentioned breakup, conveyance allowance and medical allowance is totally exempted upto a maximum of Rs. 800 and Rs 1250 pm, respectively.
On HRA also an employee will get expemtions incase he is staying in a rented accommodation as per the rules.
More than anything else, I would like to add, you may have any structure they will not attract any tax since the threshold limit for tax is Rs. 1,10,000.00 for males and 1,45,000. for ladies.
Regards
Madhumita
From India, Guwahati
Hi Madhumita,
You have said very much true regarding the Tax exemptions. As it was not required in detail but you have given the complete details very useful one..
But i would like to attract your attention that he has mentioned above the contents that he require to cover under this CTC of 96000/-. but unfortunately you have not kept in mind all those.
So kindly help him with a different one which includes all the contents he asked for, if mine is not satisfactory one.
Regards,
Amit Seth.
From India, Ahmadabad
You have said very much true regarding the Tax exemptions. As it was not required in detail but you have given the complete details very useful one..
But i would like to attract your attention that he has mentioned above the contents that he require to cover under this CTC of 96000/-. but unfortunately you have not kept in mind all those.
So kindly help him with a different one which includes all the contents he asked for, if mine is not satisfactory one.
Regards,
Amit Seth.
From India, Ahmadabad
Hi madhumita & Amit
The company in which i work ,these people did not give me any rules on which i should divide the gross salary.they simply give me a figure 7ask me to bifercate it.
Please suggest me what to do,i have read that u said.50% of gross should be Basic,50% of Basic should be HRA & so.Please tell me if there r any rules for that.
My companys Break up is
Basic Salary
HRA
Conveyance Allowance
Education Allowance
Other Allowance
Medical Allowance
LTA
The Deductions are
Provident Fund 12% on Basic
TDS if applicable
Professional Tax Deductions
Please tell me what r the rules for bifercating the Gross amount given for me & if some body is Questioning me what explnation can I give to them.Please advice me.
regarding TDS---I was toled that TDS will be charged for persons whos Basic would me more than 1Lakh Per Annum, is that correct, Tell me where can i get the rules for that.
Awaiting for ur reply
Regards
satya (Hyderabad)
From India, Hyderabad
The company in which i work ,these people did not give me any rules on which i should divide the gross salary.they simply give me a figure 7ask me to bifercate it.
Please suggest me what to do,i have read that u said.50% of gross should be Basic,50% of Basic should be HRA & so.Please tell me if there r any rules for that.
My companys Break up is
Basic Salary
HRA
Conveyance Allowance
Education Allowance
Other Allowance
Medical Allowance
LTA
The Deductions are
Provident Fund 12% on Basic
TDS if applicable
Professional Tax Deductions
Please tell me what r the rules for bifercating the Gross amount given for me & if some body is Questioning me what explnation can I give to them.Please advice me.
regarding TDS---I was toled that TDS will be charged for persons whos Basic would me more than 1Lakh Per Annum, is that correct, Tell me where can i get the rules for that.
Awaiting for ur reply
Regards
satya (Hyderabad)
From India, Hyderabad
Dear Satya,
Yes you have asked a very relevant question, but can you give us a CTC figure of which you have to prepare a break-up.
Anyways the Basic would be approx 40 - 50% of groos, and 40 - 60 % of that would be HRA,Conveyance Allowance is fixed-800/- and its exempted fro Tax. Educational Allowance that is approx 450 per children and rstricted upto 2 only. Medical allowance is 1250/- which is also exempted from tax. LTA that you may put in gross or better leave it from gross that you may pay on actual. Other allowance is the remaining amount to complete the Gross salary, i.e
Other Allowance = Gross - (Basic+HRA+CA+Medical+Edu All)
So can say Gross Salary = Basic+HRA+CA+Med+Edu+Other Allowance
Whereas out of this only two components may be deducted, one if PF which would be 12% of Basic and ESI 1.75% of gross if only Gross is below 10,000/-.
Regarding TDS, with this financial budget the ceiling is been increased from 1,00000/- to 1,10,000/-. I think Madhumita has explained that very nicely.
Above I have explained only regarding the Gross/Month. Regarding CTC you have to do some more exercise-
First Calculate Gross / Annum = 12*Gross/Month
then add Ex-Gratia or Bonus in lum sum it will now become AFGC (Annual Fixed Gross Cost)
Then Add PF contribution and ESI 4.75 % of Gross if applicable from the employer side per annum then it come your CTC or ATC.
It means CTC = Gross/Annum+EX-Gratia+PF & ESI contribution
If any other benefits are being provided from company side then you add also to conclude your CTC.
Hope it will be now very much clear with you, if get any query then feel free to revert.
Regards,
Amit Seth.
From India, Ahmadabad
Yes you have asked a very relevant question, but can you give us a CTC figure of which you have to prepare a break-up.
Anyways the Basic would be approx 40 - 50% of groos, and 40 - 60 % of that would be HRA,Conveyance Allowance is fixed-800/- and its exempted fro Tax. Educational Allowance that is approx 450 per children and rstricted upto 2 only. Medical allowance is 1250/- which is also exempted from tax. LTA that you may put in gross or better leave it from gross that you may pay on actual. Other allowance is the remaining amount to complete the Gross salary, i.e
Other Allowance = Gross - (Basic+HRA+CA+Medical+Edu All)
So can say Gross Salary = Basic+HRA+CA+Med+Edu+Other Allowance
Whereas out of this only two components may be deducted, one if PF which would be 12% of Basic and ESI 1.75% of gross if only Gross is below 10,000/-.
Regarding TDS, with this financial budget the ceiling is been increased from 1,00000/- to 1,10,000/-. I think Madhumita has explained that very nicely.
Above I have explained only regarding the Gross/Month. Regarding CTC you have to do some more exercise-
First Calculate Gross / Annum = 12*Gross/Month
then add Ex-Gratia or Bonus in lum sum it will now become AFGC (Annual Fixed Gross Cost)
Then Add PF contribution and ESI 4.75 % of Gross if applicable from the employer side per annum then it come your CTC or ATC.
It means CTC = Gross/Annum+EX-Gratia+PF & ESI contribution
If any other benefits are being provided from company side then you add also to conclude your CTC.
Hope it will be now very much clear with you, if get any query then feel free to revert.
Regards,
Amit Seth.
From India, Ahmadabad
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