Dear Sir,
Thank you for the reply. I still need some clarification.
The above said amount(Rs.30000) is gross salary of the employee. Pf employer contribution and ESI is extra payment but part of the CTC. We are paying statutory bonus along with exgratia (which is more than minimum bonus- subject to company performance) once in a year. We have additional employee benefits like Incentive (1 month salary, paid once in a year), LTA(Basic+DA, paid once in a year) and Medical reimbursement (Basic+DA, quarterly). adding altogether CTC will be 40000 P/M (approx). So should I consider 50% wages and exemptions out of 40000/- ?. So monthly Basic +DA will be 20000/- and exemptions will be 10000/-?.
2. What if the employee drawing gross salary 50000/- (Basic+DA 30000/- others 20000/-). He is out of statutory bonus eligibility (we are paying exgratia), but his total CTC will be 70000 P/m (aprox).
From India, Bengaluru
Thank you for the reply. I still need some clarification.
The above said amount(Rs.30000) is gross salary of the employee. Pf employer contribution and ESI is extra payment but part of the CTC. We are paying statutory bonus along with exgratia (which is more than minimum bonus- subject to company performance) once in a year. We have additional employee benefits like Incentive (1 month salary, paid once in a year), LTA(Basic+DA, paid once in a year) and Medical reimbursement (Basic+DA, quarterly). adding altogether CTC will be 40000 P/M (approx). So should I consider 50% wages and exemptions out of 40000/- ?. So monthly Basic +DA will be 20000/- and exemptions will be 10000/-?.
2. What if the employee drawing gross salary 50000/- (Basic+DA 30000/- others 20000/-). He is out of statutory bonus eligibility (we are paying exgratia), but his total CTC will be 70000 P/m (aprox).
From India, Bengaluru
Dear Sir,
I am working in a pharmaceutical company, my monthly Gross salary is Rs. 26566/- and CTC is Rs. 30869/-
The break up as follows.
Basic -13283/-(50% of Gross Salary)
HRA - 7970/- (60% of Basic)
LTA - 833/-
Special Allowance -4480/-
Total Gross Salary as calculated -Rs. 26566/-p.m.
Festival bonus and exgratia (583 +250) i.e Rs. 833/-
Performance Bonus - 531/-
Mediclaim - 400/-
Group Personal Accident - 25/-
Gratuity - 639/-
Employer PF including PF contribution Admin Charges - 1875/- (On Rs. 15000/-). Please be informed that our company is calculating PF as follows ( Gross salary - HRA> 15000 and <15000 calculating on the actual).
Total CTC calculated as 30869/-.
I would like to know as per coming new wages rule, is it correct. If not, kindly guide me what should be the perfect salary structure as per new wages rule with effect from 01.04.2021.
Regards
Tarak Shaw
From India, Kolkata
4I am working in a pharmaceutical company, my monthly Gross salary is Rs. 26566/- and CTC is Rs. 30869/-
The break up as follows.
Basic -13283/-(50% of Gross Salary)
HRA - 7970/- (60% of Basic)
LTA - 833/-
Special Allowance -4480/-
Total Gross Salary as calculated -Rs. 26566/-p.m.
Festival bonus and exgratia (583 +250) i.e Rs. 833/-
Performance Bonus - 531/-
Mediclaim - 400/-
Group Personal Accident - 25/-
Gratuity - 639/-
Employer PF including PF contribution Admin Charges - 1875/- (On Rs. 15000/-). Please be informed that our company is calculating PF as follows ( Gross salary - HRA> 15000 and <15000 calculating on the actual).
Total CTC calculated as 30869/-.
I would like to know as per coming new wages rule, is it correct. If not, kindly guide me what should be the perfect salary structure as per new wages rule with effect from 01.04.2021.
Regards
Tarak Shaw
From India, Kolkata
Dear Asif,
In the CTC of the employee Company can consider all costs spending for the employee.But to determine Wages as per wage code, subtract ESI contribution and any other which is not payable to the employee ( Insurance premium, Canteen subsidy if any etc.) and then 50% of the same will be Wages as per definition of Wages under wage code.It has nothing to do with the Monthly Gross Salary.
Dear Tarak,
As explained above it will be easy for you to calculate your case. However, for your ready reference I am specifically helping you to calculate based on your data.
Subtract Mediclaim, Group Personal Accident, Gratuity & Admin charge of PF from your CTC. Then 50% of the rest will be Basic & DA.
It is obviously not possible to calculate each and every case forwarded to me everyday. There are people who are taking help of my office to get their employees fitted as per wage code. If any one requires that support , please write
.
As the existing remuneration structure random varies from Organization to Organization and wage code has absolutely different approach, it will be required detailed study to restructure the existing structure based on Wages definition under wage code.
Thanks & Regards,
S K Bandyopadhyay ( West Bengal, Howrah)
CEO-USD HR Solutions
From India, New Delhi
In the CTC of the employee Company can consider all costs spending for the employee.But to determine Wages as per wage code, subtract ESI contribution and any other which is not payable to the employee ( Insurance premium, Canteen subsidy if any etc.) and then 50% of the same will be Wages as per definition of Wages under wage code.It has nothing to do with the Monthly Gross Salary.
Dear Tarak,
As explained above it will be easy for you to calculate your case. However, for your ready reference I am specifically helping you to calculate based on your data.
Subtract Mediclaim, Group Personal Accident, Gratuity & Admin charge of PF from your CTC. Then 50% of the rest will be Basic & DA.
It is obviously not possible to calculate each and every case forwarded to me everyday. There are people who are taking help of my office to get their employees fitted as per wage code. If any one requires that support , please write
As the existing remuneration structure random varies from Organization to Organization and wage code has absolutely different approach, it will be required detailed study to restructure the existing structure based on Wages definition under wage code.
Thanks & Regards,
S K Bandyopadhyay ( West Bengal, Howrah)
CEO-USD HR Solutions
From India, New Delhi
Dear Oneus_tomoon,
I am not agree with the Wages Structure.
As per my understanding, the Code allows maximum 50% exclusion components from the Wages (means at least minimum 50% part of the Gross Wages/CTC will be countable for calculating statutory benefits like PF, ESI, Statutory Bonus, Gratuity, EL etc.).
You have considered the HRA on lower side. It should be 40% or 50% of the Basic, so that employees can avail maximum Income Tax exemptions.
As per my opinion, for Gross Wages/CTC of Rs. 25,000, the idle structure should be:-
Basic = 12,500 (being 50%, or equal to all other excluded components)
HRA = 6,250
LTA = 1,000
Statutory Bonus = 1,041/-
Mobile Allowance, = 1,000
Special Allowance, - = 701
Monthly Gross = 22,492
Employer’s EPF = 1,500
Employer’s ESI = 407 (Since 50% wages excluded, hence ESI will also applicable)
Gratuity = 601
Total Wages = 25,000
Though Rs. 3 Lacs is very lower package to consider for Income Tax point of view. But I framed this keeping in view higher grade wages as well.
I request other seniors to share your inputs as well.
From India, Delhi
I am not agree with the Wages Structure.
As per my understanding, the Code allows maximum 50% exclusion components from the Wages (means at least minimum 50% part of the Gross Wages/CTC will be countable for calculating statutory benefits like PF, ESI, Statutory Bonus, Gratuity, EL etc.).
You have considered the HRA on lower side. It should be 40% or 50% of the Basic, so that employees can avail maximum Income Tax exemptions.
As per my opinion, for Gross Wages/CTC of Rs. 25,000, the idle structure should be:-
Basic = 12,500 (being 50%, or equal to all other excluded components)
HRA = 6,250
LTA = 1,000
Statutory Bonus = 1,041/-
Mobile Allowance, = 1,000
Special Allowance, - = 701
Monthly Gross = 22,492
Employer’s EPF = 1,500
Employer’s ESI = 407 (Since 50% wages excluded, hence ESI will also applicable)
Gratuity = 601
Total Wages = 25,000
Though Rs. 3 Lacs is very lower package to consider for Income Tax point of view. But I framed this keeping in view higher grade wages as well.
I request other seniors to share your inputs as well.
From India, Delhi
The above calculation from Mr. Pan Singh Dangwal is absolutely Ok. That does not mean the calculation made by Mr. Oneus is wrong. Wage Code has not mentioned not to pay more than guide line given in Wages definition. It depends on the capacity of the Industry to pay. The Wages (Basic) amount as per Mr. Oneus calculation is 15,000/- which is more than the guide line of wage code and the 50:50 conditions has been fulfilled in the calculation. As HR professionals we should not only think about optimization of remuneration structure rather if the Organization has capacity to pay - better to pay more.
As per the definition of Wages, All remuneration by way of salaries, allowances or otherwise expressed in terms of money ............ payable to any employee ....... and in 50% exclusion ESI is not there and also not payable to the employee, therefore for calculation of all remuneration under the definition of Wages - ESI , any other Insurance premium, subsidy of Canteen, Transport cost if any etc. etc. should not be considered. Only exception in exclusion clause (b) Value of any house accommodation or supply of light, water, medical etc. ( provided by integrated steel plant, big power plant etc.) - not payable to employee but to be considered as part of Wages .
S K Bandyopadhyay ( WB, Howrah)
CEO- USD HR Solutions
From India, New Delhi
As per the definition of Wages, All remuneration by way of salaries, allowances or otherwise expressed in terms of money ............ payable to any employee ....... and in 50% exclusion ESI is not there and also not payable to the employee, therefore for calculation of all remuneration under the definition of Wages - ESI , any other Insurance premium, subsidy of Canteen, Transport cost if any etc. etc. should not be considered. Only exception in exclusion clause (b) Value of any house accommodation or supply of light, water, medical etc. ( provided by integrated steel plant, big power plant etc.) - not payable to employee but to be considered as part of Wages .
S K Bandyopadhyay ( WB, Howrah)
CEO- USD HR Solutions
From India, New Delhi
Dear Mr S K Bandyopadhyay,
Thanks for your appreciation on my Wages Structure.
I understand if company has capacity to pay more then Basic Wages can be fixed on higher side as well.
But as you are aware we are working in dynamic world where as a professional we need to frame the structure considering various aspects (Take Home, cost effective, Tax Friendly, easy to understand, etc.).
In my reply I specifically mentioned the HRA considered on lower side by Mr Oneus, which will cause trouble for higher Tax bracket employees. Moreover, for 25,000/- (when 50% excluded) the balance wages comes under previous of ESI which also I added.
Here when we post any comment on such typical issue, it must cover all aspects. Because same is being read by many freshers and juniors as well. So as senior member we are supposed to set best solutions.
Hope you and other will agree with my points. I don't say my structure is perfect, because till date I have not gone through the Act (thoroughly).
Moreover, making Salary Structure is not my core activity, hence I requested other seniors for more inputs.
Thanks.
From India, Delhi
Thanks for your appreciation on my Wages Structure.
I understand if company has capacity to pay more then Basic Wages can be fixed on higher side as well.
But as you are aware we are working in dynamic world where as a professional we need to frame the structure considering various aspects (Take Home, cost effective, Tax Friendly, easy to understand, etc.).
In my reply I specifically mentioned the HRA considered on lower side by Mr Oneus, which will cause trouble for higher Tax bracket employees. Moreover, for 25,000/- (when 50% excluded) the balance wages comes under previous of ESI which also I added.
Here when we post any comment on such typical issue, it must cover all aspects. Because same is being read by many freshers and juniors as well. So as senior member we are supposed to set best solutions.
Hope you and other will agree with my points. I don't say my structure is perfect, because till date I have not gone through the Act (thoroughly).
Moreover, making Salary Structure is not my core activity, hence I requested other seniors for more inputs.
Thanks.
From India, Delhi
Dear Mr. Pan Singh Dangwal,
I am now 68 and running my 69.I do not know how old are you. I always appreciate people when they are adding value to system. Salary Structure is not your core activity, even after that you have fitted one structure as per wage code correctly is really once again appreciable. All your suggestions regarding HRA etc. are well accepted to me.
Please add value to system as per your faculty, acumen, intelligence etc. on continuous basis for the betterment of the larger society.
Thanks & Regards,
S K Bandyopadhyay
CEO-USD HR Solutions
From India, New Delhi
I am now 68 and running my 69.I do not know how old are you. I always appreciate people when they are adding value to system. Salary Structure is not your core activity, even after that you have fitted one structure as per wage code correctly is really once again appreciable. All your suggestions regarding HRA etc. are well accepted to me.
Please add value to system as per your faculty, acumen, intelligence etc. on continuous basis for the betterment of the larger society.
Thanks & Regards,
S K Bandyopadhyay
CEO-USD HR Solutions
From India, New Delhi
Dear Saswata Sir,
Can you please explain about the EPF & EPS wages as of now? If an employee's gross salary is Rs.45000/-, in this case, can we calculate his EPF & EPS wages Rs. 15000/- Maxmimum and can deduct @12% i.e. Rs. 1800/- as PF contribution?
Regards
Tarak Shaw
From India, Kolkata
Can you please explain about the EPF & EPS wages as of now? If an employee's gross salary is Rs.45000/-, in this case, can we calculate his EPF & EPS wages Rs. 15000/- Maxmimum and can deduct @12% i.e. Rs. 1800/- as PF contribution?
Regards
Tarak Shaw
From India, Kolkata
Dear Tarak
As the things stand now, your working is right. maximum statutory deduction is ₹ 1,800.
Any deduction beyond that will be voluntary deduction (approval of employee in writing is necessary) and the employer may nor may not contribute beyond 1,800.
Please also remember in case of additional deduction, total deduction of all items can not exceed 50% of gross wages
From India, Mumbai
As the things stand now, your working is right. maximum statutory deduction is ₹ 1,800.
Any deduction beyond that will be voluntary deduction (approval of employee in writing is necessary) and the employer may nor may not contribute beyond 1,800.
Please also remember in case of additional deduction, total deduction of all items can not exceed 50% of gross wages
From India, Mumbai
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Minimum Wage of UP & UK.pdf