I understand how it is beneficial to the employee as the interest rate is very low for PF.
but how does the employer benefit as it is a part of the CTC and anyhow you keep any amount of heads the employer has to pay a certain amount.
thanks for gicing the reply so soon.
Regards
Simran
From Germany
but how does the employer benefit as it is a part of the CTC and anyhow you keep any amount of heads the employer has to pay a certain amount.
thanks for gicing the reply so soon.
Regards
Simran
From Germany
Thanks to all of you for this kind of support. well now its quite clear that by reducing basic and adding this reduced amount as different allowances in the CTC structure can benefit both employee and employer. if i am right then take home sal for employee will increase .....and new added allowances can help the employee save tax, thus good for employee.
and if employee is happy....then good for employer :)
Thanks
Preeti :)
From India, Mumbai
and if employee is happy....then good for employer :)
Thanks
Preeti :)
From India, Mumbai
3
Thank you so much Jivan, A really good CTC option sheet. It gives a very clear picture about different components of CTC and also about limits for tax savings. Thanks once again. Preeti Kumar
From India, Mumbai
From India, Mumbai
Hi, Sorry for the delayed reply, you can add periodicals like magazine bill to be produced to avoid tax. add telepnone bills etc Neeraja
From India, Madras
From India, Madras
Hi Simran, As per your answer, i think that you are from Lifestyle International Pvt. Ltd. employee...
From India, Lucknow
From India, Lucknow
Hello,
Here is the salary structure which goes in employees' favour-
House Rent Allowance (HRA)
TRAVEL ALLOWANCE (TA) [800 pm]
PF(12% of basic)
Leave Travel Allowance (LTA)
MEDIC CLAIM
Medical Allowance
Employee get this every month n at the time of tax deductiion employees can show reciept for LTA(train tickets), HRA, Medical Allowance, while TA if is 800 per month then its employees' dont have to pay tax on it.
From India, Bangalore
Here is the salary structure which goes in employees' favour-
House Rent Allowance (HRA)
TRAVEL ALLOWANCE (TA) [800 pm]
PF(12% of basic)
Leave Travel Allowance (LTA)
MEDIC CLAIM
Medical Allowance
Employee get this every month n at the time of tax deductiion employees can show reciept for LTA(train tickets), HRA, Medical Allowance, while TA if is 800 per month then its employees' dont have to pay tax on it.
From India, Bangalore
Hi Simran and Parul,
There are many ways to define salary break and most of them are good for tax savings. However, there is no best method for avoiding taxes. Instead it is always advisable to suggest that employees go for investments of up to Rs. 1,00,000 every year.
As for the salary break, one of the better ones can be described as under:
a. Basic - 30% to 50% of gross salary (ideally around 40% mark)
b. HRA - 40% of basic salary
c. Conveyance - Rs. 800 pm (max. exempted amount)
d. Medical - Rs. 1250 pm (max. exempted amount)
Other allowances - Difference of gross salary and (a+b+c+d)
You can of course divide the salary under several other heads, but then you would be incurring FBT for the employer. There is always option of giving dearness allowance or cost of living allowance, but that is not tax exempt to the best of my knowledge, and generally not preferable for private companies because you then need to monitor the applicable DA index for your city and make changes to salaries each month accordingly.
Regards,
Gaurang Shah
From India, Ahmadabad
There are many ways to define salary break and most of them are good for tax savings. However, there is no best method for avoiding taxes. Instead it is always advisable to suggest that employees go for investments of up to Rs. 1,00,000 every year.
As for the salary break, one of the better ones can be described as under:
a. Basic - 30% to 50% of gross salary (ideally around 40% mark)
b. HRA - 40% of basic salary
c. Conveyance - Rs. 800 pm (max. exempted amount)
d. Medical - Rs. 1250 pm (max. exempted amount)
Other allowances - Difference of gross salary and (a+b+c+d)
You can of course divide the salary under several other heads, but then you would be incurring FBT for the employer. There is always option of giving dearness allowance or cost of living allowance, but that is not tax exempt to the best of my knowledge, and generally not preferable for private companies because you then need to monitor the applicable DA index for your city and make changes to salaries each month accordingly.
Regards,
Gaurang Shah
From India, Ahmadabad
3 main points for an ideal salary structure is
- Be tax efficient and give employees the opportunity to save as much tax as possible
-Keep the employer's liability to the minimum
- Compliance norms like PF & Minimum wages to be kept in mind
I am an HR manager for an upcoming start up and i was required to structure salaries. I referred to the article below because it explains the components of a salary as well as gives me a downloadable salary calculator .
What should you consider for the perfect performance appraisal?
This should really help you out
From India, Mumbai
- Be tax efficient and give employees the opportunity to save as much tax as possible
-Keep the employer's liability to the minimum
- Compliance norms like PF & Minimum wages to be kept in mind
I am an HR manager for an upcoming start up and i was required to structure salaries. I referred to the article below because it explains the components of a salary as well as gives me a downloadable salary calculator .
What should you consider for the perfect performance appraisal?
This should really help you out
From India, Mumbai
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Creating a Competitive Salary Structure.doc
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