Thanks SIva, That was very informative. One point: You have mentioned that if the position is that of Software Engineer, then the Min. wages would not be applicable.
Could you please elaborate on that?
Thanks and regards,
Ayona
From India, Delhi
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20Could you please elaborate on that?
Thanks and regards,
Ayona
From India, Delhi
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Dear All
I have also a doubt regarding Minimum wages & basic -
1. The basic is equal to minimum wage or not if the basic wages is not equlant to minimum wages how we calculated the Pf & ESI which is compulsary to calculate on basic.
2. For example - the minimum wages for a skilled person in UP is Rs.150/- according that the basic is equal to Rs. 4500/- per month & if the salary structure for any employee is like that -
Basic - 2795.00
Educational Allow.-200.00
HRA-1118.00
Medical Reimbursment -700
Other Allowance - 108.00
Transport allow - 800.00
PF -
From India
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I have also a doubt regarding Minimum wages & basic -
1. The basic is equal to minimum wage or not if the basic wages is not equlant to minimum wages how we calculated the Pf & ESI which is compulsary to calculate on basic.
2. For example - the minimum wages for a skilled person in UP is Rs.150/- according that the basic is equal to Rs. 4500/- per month & if the salary structure for any employee is like that -
Basic - 2795.00
Educational Allow.-200.00
HRA-1118.00
Medical Reimbursment -700
Other Allowance - 108.00
Transport allow - 800.00
PF -
From India
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(Fact Check Failed/Partial)-The user's reply contains inaccuracies. The minimum wage should be considered while determining the basic pay for PF and ESI calculations. The basic pay should meet or exceed the minimum wage criteria.
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Dear friends
I have also some doubt between minimum wages & Basic pay -
1. Basic is equalent to the minimum wages or not.
2. As per Central Govt. current minimum wages is Rs.150/- daily for skilled person in UP. according to that the salary or wages of an employee will be equal to Rs. 4500/- +DA ( Applicable 30 % on basic)
3. For PF & ESI calculation, It is calculated on basic salary of the employee & here as I know the basic is equal to minmum wages.
4. What is the corect way of calculating the basic is that equal to minimum wages or it can be less than that.
For Example i m provinding one Salary break up pls clarufy me is that correct as per Law or Not -
Earnings
Basic - 2795.00
EA - 200.00
HRA - 1118.00
MR - 700.00
OA - 108.00
TA - 800.00
-------------------
5721.00
-------------------
Total Deductions -
PT - 60.00
PF - 335.00
--------------------
395.00
--------------------
Net Salary in Hand is : 5326.00
is that the correct beak up of ssalary as per law or not ?
Waiting for your prompt reply.
Thanks & Regards
Vijay
From India
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I have also some doubt between minimum wages & Basic pay -
1. Basic is equalent to the minimum wages or not.
2. As per Central Govt. current minimum wages is Rs.150/- daily for skilled person in UP. according to that the salary or wages of an employee will be equal to Rs. 4500/- +DA ( Applicable 30 % on basic)
3. For PF & ESI calculation, It is calculated on basic salary of the employee & here as I know the basic is equal to minmum wages.
4. What is the corect way of calculating the basic is that equal to minimum wages or it can be less than that.
For Example i m provinding one Salary break up pls clarufy me is that correct as per Law or Not -
Earnings
Basic - 2795.00
EA - 200.00
HRA - 1118.00
MR - 700.00
OA - 108.00
TA - 800.00
-------------------
5721.00
-------------------
Total Deductions -
PT - 60.00
PF - 335.00
--------------------
395.00
--------------------
Net Salary in Hand is : 5326.00
is that the correct beak up of ssalary as per law or not ?
Waiting for your prompt reply.
Thanks & Regards
Vijay
From India
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(Fact Check Failed/Partial)-The user's reply contains inaccuracies. Basic pay need not necessarily be equivalent to minimum wages. Basic pay can be less but not lower than the prescribed minimum wage. Deductions like PF are calculated on basic pay. The salary breakdown provided does not align with legal requirements.
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thanks Katyana, that was very informative! I still have few queries:
As I was going through the attachment that you sent, I could not find out in which category, our organisation (A BPO and a software development company: Kolkata) would fall into.
There, we have categories like commercial establishments other than shops.
so wherefrom did you get 118.00 as the rate per day? It would be good if you could elaborate a little bit on that.
B Regards,
Ayona
From India, Delhi
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As I was going through the attachment that you sent, I could not find out in which category, our organisation (A BPO and a software development company: Kolkata) would fall into.
There, we have categories like commercial establishments other than shops.
so wherefrom did you get 118.00 as the rate per day? It would be good if you could elaborate a little bit on that.
B Regards,
Ayona
From India, Delhi
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(Fact Checked)-The rate per day mentioned in the attachment is not directly related to the basic pay calculation. The attachment provides minimum wage rates for different categories of workers. Check the category under which your organization falls to determine the applicable minimum wage. Thank you for your attention to detail. (1 Acknowledge point)
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Dear Guy
What we follow : Basic + DA = 60% from the current CTC. If u dont follow DA then you can fix your Basic with the range of 20% to 40%. Plus other Allowances. The Higher the Basic + DA the Higher the PF you are going to pay.
Regards
Arunkumar.M
Pondicherry
From India, Mumbai
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What we follow : Basic + DA = 60% from the current CTC. If u dont follow DA then you can fix your Basic with the range of 20% to 40%. Plus other Allowances. The Higher the Basic + DA the Higher the PF you are going to pay.
Regards
Arunkumar.M
Pondicherry
From India, Mumbai
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(Fact Check Failed/Partial)-The user's reply contains some inaccuracies. The correct formula for Basic salary calculation is not solely based on CTC but also needs to comply with the statutory requirements. The percentage allocation for Basic salary may vary based on industry norms and state regulations. It's essential to consider the specific rules applicable to your location.
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Dear Ayona,
As per the instructions of EPFO, We cant bifurcate the minimum salary. PF Should be deducted in full minimum wages applicable to the each category of employee in that state. Instructions are already issued in Himachal Pradesh & Haryana EPFO.
Hence it is ideal to keep the (basic+da) salary on minimum wages.
Rgds
Saroj Kumar
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As per the instructions of EPFO, We cant bifurcate the minimum salary. PF Should be deducted in full minimum wages applicable to the each category of employee in that state. Instructions are already issued in Himachal Pradesh & Haryana EPFO.
Hence it is ideal to keep the (basic+da) salary on minimum wages.
Rgds
Saroj Kumar
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(Fact Check Failed/Partial)-The user reply contains inaccurate information. PF should be calculated as a percentage of the actual basic wage, not the minimum wage. It is essential to follow the correct rules for PF deductions.
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Dear Friend,
Basic and DA are combined in Private industry and is set as Basic only for any further statutory calculations.
Basic should cover an employee minimum expenses.
It can be on an average set as follows.
Un-skilled employees <=3500
Skilled Employeess <= 4000
Highly skilled <=5000
Case 1)Let us suppose a employee joins with salary Rs.4000
Then give his Basic alone as Rs4000
Case 2)Let us suppose an employee monthly salary is Rs.5000
Set his basic as Rs.4000 and Other Allowance as Rs.1000
Case 3) If an employee Joins with salary Rs. 6000
Basic : 4000
HRA : 1000
MA : 500
TA : 500
Gross Rs. 6000
the break up for these salary is only for basic as we pay PF and ESI and the break up do not give the employees any benefits as they do not come into taxable limit.
Let his salary be Rs. 10,250
Basic: 7000
HRA : 3000
Others: 250
here total is 10,250 the advantage is the employer need not pay his PF or ESI contribution.
For the same structure of Rs. 10,000 if the company is paying PF and ESI
Basic: 5000
HRA: 2500 if office is in chennai, Mumbai, Kolkatta or Delhi else 40% of Basic
TA : 800
MA : 1250
LTA : 450
Gross: 10,250
Regards,
R.Ramamurthy
From India, Madras
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Basic and DA are combined in Private industry and is set as Basic only for any further statutory calculations.
Basic should cover an employee minimum expenses.
It can be on an average set as follows.
Un-skilled employees <=3500
Skilled Employeess <= 4000
Highly skilled <=5000
Case 1)Let us suppose a employee joins with salary Rs.4000
Then give his Basic alone as Rs4000
Case 2)Let us suppose an employee monthly salary is Rs.5000
Set his basic as Rs.4000 and Other Allowance as Rs.1000
Case 3) If an employee Joins with salary Rs. 6000
Basic : 4000
HRA : 1000
MA : 500
TA : 500
Gross Rs. 6000
the break up for these salary is only for basic as we pay PF and ESI and the break up do not give the employees any benefits as they do not come into taxable limit.
Let his salary be Rs. 10,250
Basic: 7000
HRA : 3000
Others: 250
here total is 10,250 the advantage is the employer need not pay his PF or ESI contribution.
For the same structure of Rs. 10,000 if the company is paying PF and ESI
Basic: 5000
HRA: 2500 if office is in chennai, Mumbai, Kolkatta or Delhi else 40% of Basic
TA : 800
MA : 1250
LTA : 450
Gross: 10,250
Regards,
R.Ramamurthy
From India, Madras
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(Fact Check Failed/Partial)-The user reply contains some inaccuracies regarding the structuring of basic pay and allowances. Basic pay should meet statutory requirements and cannot be arbitrarily set. The user's calculations and approach to structuring pay are not aligned with legal standards.
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Hello Quereshi,
Please take a look at the CTC structure that I am framing: say for example that the monthly CTC is Rs. 12,000 P.M. , so the CTC break up would be as follows:
Basic: 3600 (30% of 12,000)
HRA: 1800 (50% of basic)
C.A.: 800 (till this amount this is tax free)
P.F. 1440 (12% of basic).......employer's contribution
S.A.: 4360 (balance amount)
Less:
Employee's contribution: 12% of basic
Please take a note of the following points:
1) Basic + DA must be equivalent to the min wages prescribed by the commissioner's off (if you do not have D.A. then the basic alone should compensate that....this would differ from state to state)
2) HRA should always be 50% of the basic (In case of metro city) and 40 % on the same in case of non metro city
3) Conveyance Allowance (C.A.).should be 800 P.M. as till that amt it is tax free.
You can also include other components like LTA (Leave Travel Allowance); CCA (City Compensatory Allowance)
Please let me know if you still need further clarifications.
Thanks and regards,
Ayona
From India, Delhi
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Please take a look at the CTC structure that I am framing: say for example that the monthly CTC is Rs. 12,000 P.M. , so the CTC break up would be as follows:
Basic: 3600 (30% of 12,000)
HRA: 1800 (50% of basic)
C.A.: 800 (till this amount this is tax free)
P.F. 1440 (12% of basic).......employer's contribution
S.A.: 4360 (balance amount)
Less:
Employee's contribution: 12% of basic
Please take a note of the following points:
1) Basic + DA must be equivalent to the min wages prescribed by the commissioner's off (if you do not have D.A. then the basic alone should compensate that....this would differ from state to state)
2) HRA should always be 50% of the basic (In case of metro city) and 40 % on the same in case of non metro city
3) Conveyance Allowance (C.A.).should be 800 P.M. as till that amt it is tax free.
You can also include other components like LTA (Leave Travel Allowance); CCA (City Compensatory Allowance)
Please let me know if you still need further clarifications.
Thanks and regards,
Ayona
From India, Delhi
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(Fact Checked)-The user's reply contains accurate information regarding the CTC structure, basic salary calculation, HRA percentage, and tax-free components. The mention of including LTA, CCA is also beneficial. (1 Acknowledge point)
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dear
\
please note that there is no such guideline for framing the basic
the main point which is required to be kept in mind is that whether you are paying minimum wage to that candidate or not.
Also if PF is applicable to your company please make sure that the basic which you give should not be less than what the candidate was getting earlier(with previous companu) if he has worked previously (Though it is not mandatory but try to adjust accordingly)
it is always better to frame a policy indicating the range of basic salary for various levels
e.g. junior level 1500~2500
Medium Level 3000~5000
like that
Cheers
From India, New Delhi
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\
please note that there is no such guideline for framing the basic
the main point which is required to be kept in mind is that whether you are paying minimum wage to that candidate or not.
Also if PF is applicable to your company please make sure that the basic which you give should not be less than what the candidate was getting earlier(with previous companu) if he has worked previously (Though it is not mandatory but try to adjust accordingly)
it is always better to frame a policy indicating the range of basic salary for various levels
e.g. junior level 1500~2500
Medium Level 3000~5000
like that
Cheers
From India, New Delhi
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(Fact Checked)-The user reply is partially correct. While there is no specific statutory ruling on the exact percentage of basic salary, ensuring compliance with minimum wage laws and considering PF implications are crucial. Additionally, establishing a basic salary range for different levels is a good practice. (1 Acknowledge point)
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Hi,
Please let me know the writen rules from the PF department as you may be deduct PF on minimum wages, pf department only write you can diduct PF @ 12% from basic, any body send to me any notification / rules as such the employer to eligible pay PF @ 12% on minimum wages (specefic=minimum) ?
Only esi is applicable on minimum wages employer and employee share (you can show the break-up as Basic 70% and rest HRA in case the minimum wages) otherwise your salary is Rs. 20000/- then you make as under:-
Basic 50% of Rs. 20K and 40% (in non metro city) and 50% (in metro city) HRA can calculate on basic, rest you can pay as medical reimbursement @ Rs. 15000/- Per Anum {as per income tax department, if you provide the medical bills etc.] and you pay as transport allowance and special allowances. This is the organisational policy, don't worry guy's.
If any have writeen rules from government department please show me the details.
Thanks & regares
Manoj
From India, Delhi
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Please let me know the writen rules from the PF department as you may be deduct PF on minimum wages, pf department only write you can diduct PF @ 12% from basic, any body send to me any notification / rules as such the employer to eligible pay PF @ 12% on minimum wages (specefic=minimum) ?
Only esi is applicable on minimum wages employer and employee share (you can show the break-up as Basic 70% and rest HRA in case the minimum wages) otherwise your salary is Rs. 20000/- then you make as under:-
Basic 50% of Rs. 20K and 40% (in non metro city) and 50% (in metro city) HRA can calculate on basic, rest you can pay as medical reimbursement @ Rs. 15000/- Per Anum {as per income tax department, if you provide the medical bills etc.] and you pay as transport allowance and special allowances. This is the organisational policy, don't worry guy's.
If any have writeen rules from government department please show me the details.
Thanks & regares
Manoj
From India, Delhi
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(Fact Check Failed/Partial)-The information provided in the user reply is incorrect.
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(Fact Check Failed/Partial)-The mention of minimum wages not being applicable to the position of Software Engineer is incorrect. Minimum wages are statutory and apply to all positions regardless of designation.