Hi Indu,
I am not sure if you have been asked to prepare a standard template that fits all the positions in your organization. I am not sure if such a template is possible.
Depending upon the case, you can play a lot with the fringe benefits. Fringe benefits remains taxable but not to the extent as salary components.
I can only suggest you the right approach to follow. I will have to do some homework to suggest you the necessary components but for now, i can definitely help you with the philosophy that you should follow to arrive at a pay structure.
DEVISE THE STRUCTURE IN A MANNER SUCH THAT THE TAX LIABILITY ON THE EMPLOYEES IS MINIMIZED.
You can now implement the concept of basket of allowance to give flexibility to the employees. It is generally called "special allowance" and employees are free to play with the basket components depending upon their requirements and also how much would they want to take home.
Hope this is some help.
regards,
Pseudonym-Gopikishan :-)
From India, Mumbai
3I am not sure if you have been asked to prepare a standard template that fits all the positions in your organization. I am not sure if such a template is possible.
Depending upon the case, you can play a lot with the fringe benefits. Fringe benefits remains taxable but not to the extent as salary components.
I can only suggest you the right approach to follow. I will have to do some homework to suggest you the necessary components but for now, i can definitely help you with the philosophy that you should follow to arrive at a pay structure.
DEVISE THE STRUCTURE IN A MANNER SUCH THAT THE TAX LIABILITY ON THE EMPLOYEES IS MINIMIZED.
You can now implement the concept of basket of allowance to give flexibility to the employees. It is generally called "special allowance" and employees are free to play with the basket components depending upon their requirements and also how much would they want to take home.
Hope this is some help.
regards,
Pseudonym-Gopikishan :-)
From India, Mumbai
Just to help employees in getting higher tax benefit of higher rent, increase the amount of HRA as House rent Allowance up to 40% of basic salary is deductible from their income.
The fixed medical amount is taxable in the hands of employees hence make it on the basis of reimbursement. Maximum allowable is 15000 during the year.
Also let employees decide about the variable pays... give them the option of claiming leave travelling allowance which can be claimed generally once in two years.
The fixed medical amount is taxable in the hands of employees hence make it on the basis of reimbursement. Maximum allowable is 15000 during the year.
Also let employees decide about the variable pays... give them the option of claiming leave travelling allowance which can be claimed generally once in two years.
Dear Indrani,
Attached file will help you more in preparation of Salary Structure.
Regarding Medical Allowance, Pawan is correct and if you hold the amount and pay monthly, quarterly, halfyearly or yearly it require bills and taxable.
If you are paying alongwith salary up to 1000/- is not taxable.
Ajay Sharma
09460131855
From India, Jaipur
Attached file will help you more in preparation of Salary Structure.
Regarding Medical Allowance, Pawan is correct and if you hold the amount and pay monthly, quarterly, halfyearly or yearly it require bills and taxable.
If you are paying alongwith salary up to 1000/- is not taxable.
Ajay Sharma
09460131855
From India, Jaipur
Dear Mr Chandnish
Thank you so much for your valuable inputs .I have incorporated the other components inthe salary structure except for loan repayment prepaid/advance and leave encashment .We are yet to implement Pf and ESI in our organisation .We usually dont extend loan to our employees and leave encashment is a good suggestion I will discuss it out with management
Thank you for your inputs
Keep Posting
Thanks and Regards
Indrani Chakraborty
From India, Pune
Thank you so much for your valuable inputs .I have incorporated the other components inthe salary structure except for loan repayment prepaid/advance and leave encashment .We are yet to implement Pf and ESI in our organisation .We usually dont extend loan to our employees and leave encashment is a good suggestion I will discuss it out with management
Thank you for your inputs
Keep Posting
Thanks and Regards
Indrani Chakraborty
From India, Pune
Hi Indu,
I saw the structure which was posted to you, there is some correction. I hope you are aware about CTC "COST TO COMPANY" So all cost will be included in CTC which incurred by employee as under
BASIC
DA
HRA
CONVEYANCE
SPL. ALLW.
SUPL. ALLW.
FOOD ALLW.
GROSS -------------------
PF 12% EMPLOYER
ESI 4.75% EMPLOYER (IF APPLICABLE)
P.TAX (IF APPLICABLE)
BONUS ( AS PER COMPANY POLICY)
GRATUITY
SUPERANNUATION
THAT IS CTC
Plz see Basic + DA wages should equal minimum wages, we can't bifurcate minimum wages. (As its ordered by supreme court)
Rgds/Jitender
From India, New Delhi
I saw the structure which was posted to you, there is some correction. I hope you are aware about CTC "COST TO COMPANY" So all cost will be included in CTC which incurred by employee as under
BASIC
DA
HRA
CONVEYANCE
SPL. ALLW.
SUPL. ALLW.
FOOD ALLW.
GROSS -------------------
PF 12% EMPLOYER
ESI 4.75% EMPLOYER (IF APPLICABLE)
P.TAX (IF APPLICABLE)
BONUS ( AS PER COMPANY POLICY)
GRATUITY
SUPERANNUATION
THAT IS CTC
Plz see Basic + DA wages should equal minimum wages, we can't bifurcate minimum wages. (As its ordered by supreme court)
Rgds/Jitender
From India, New Delhi
Dear Mr Gopikishan Thank you for your feedback.I will definitely take care so that the salary structure is employee friendly. Keep posting Thanks and Regards Indrani Chakraborty
From India, Pune
From India, Pune
Dear Mr Ajay Sheel
Thank you very much for the attached salary structure .A member of this community has pointed out that the city allowance is different for different cities,can you please let me know the figures for pune ?
Thanking you in anticipation
Indrani Chakraborty
From India, Pune
Thank you very much for the attached salary structure .A member of this community has pointed out that the city allowance is different for different cities,can you please let me know the figures for pune ?
Thanking you in anticipation
Indrani Chakraborty
From India, Pune
Hi Indrawn,
I want to add some notes.
1. Medical allowance is different from reimbursement. - If your company is reimbursing the bills, the company has to pay the Fringe benefit tax on it. But it is allowance then to the max. of 15K is allowed for the employee and it is tax free. For the allowance you have to collect the bills and produce it to Auditor for the preparation of form16 (at the end of financial year).
2. Your salary structure -
Basic Salary- 40% of gross Salary - OK
HRA -30% of basic - OK
City allowance-10% - OK
Conveyance allowance-10% - wrong (Pune comes as non - metro so conveyance is fixed at 800 per month no changes in it.)
Sundry medical expenses 1000(fixed amount) - OK as this will change from company to company but for taxation max. 15K allowed per year
Mobile allowance 500 - is comes under Fringe benefit tax for the company and for the allowance to get tax free - he/she has to produce the bill
Other allowances xxxx Residual amount - OK
hope this will keep you happy, if you need any thing extra mail me-
cheers
suneel.
From India, Bangalore
I want to add some notes.
1. Medical allowance is different from reimbursement. - If your company is reimbursing the bills, the company has to pay the Fringe benefit tax on it. But it is allowance then to the max. of 15K is allowed for the employee and it is tax free. For the allowance you have to collect the bills and produce it to Auditor for the preparation of form16 (at the end of financial year).
2. Your salary structure -
Basic Salary- 40% of gross Salary - OK
HRA -30% of basic - OK
City allowance-10% - OK
Conveyance allowance-10% - wrong (Pune comes as non - metro so conveyance is fixed at 800 per month no changes in it.)
Sundry medical expenses 1000(fixed amount) - OK as this will change from company to company but for taxation max. 15K allowed per year
Mobile allowance 500 - is comes under Fringe benefit tax for the company and for the allowance to get tax free - he/she has to produce the bill
Other allowances xxxx Residual amount - OK
hope this will keep you happy, if you need any thing extra mail me-
cheers
suneel.
From India, Bangalore
Dear Mr Jitender
Thank you very much for the help extended.I will mention the professional tax in the CTC the rest other things are not applicable to our company.I will also keep in mind your suggestion about the bifurcation of salary .
Thank you
Keep posting
Regards
Indrani Chakraborty
From India, Pune
Thank you very much for the help extended.I will mention the professional tax in the CTC the rest other things are not applicable to our company.I will also keep in mind your suggestion about the bifurcation of salary .
Thank you
Keep posting
Regards
Indrani Chakraborty
From India, Pune
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Creating a Competitive Salary Structure.doc
Salary Structure.zip