Hi
I am in a process of setting up a startup and am about to hire a couple of people. Their salaries are 10 lakh and 14 Lakh. Now I dont want that even when they are getting such good packages their take home is peanuts.
Can anyone please design a package for me that can ensure maximum take home salary for 10 lakhs and 14 lakh package, keeping in mind indian taxation laws.
I shall be grateful to you as this will be a great help to a startup.
Thanks again
Vishal
From United States, Saint Louis
1I am in a process of setting up a startup and am about to hire a couple of people. Their salaries are 10 lakh and 14 Lakh. Now I dont want that even when they are getting such good packages their take home is peanuts.
Can anyone please design a package for me that can ensure maximum take home salary for 10 lakhs and 14 lakh package, keeping in mind indian taxation laws.
I shall be grateful to you as this will be a great help to a startup.
Thanks again
Vishal
From United States, Saint Louis
Hi Roshni, I am attaching one salary breakup in which i have also taken example of Gross salary:INR 14,00,000 lacs. Kindly see to it. Hope it helps !!
From India, Delhi
From India, Delhi
Thanks a lot for your quick response. I will appreciate if you can actually put in some figures in breaking up the salary of Rs. 10Lakh and 14 lakh.
@ Ekta - The excel sheet is really informative. I just wish to know what is covered under city compensatory allowance. I plan to have my office in Noida. Will there be any special consideration for that. Also browsing through other threads, I did not see any such thing like city allowance. Is it tax deductable or will we have to pay FBT(fringe benefit tax) on this.
From United States, Saint Louis
@ Ekta - The excel sheet is really informative. I just wish to know what is covered under city compensatory allowance. I plan to have my office in Noida. Will there be any special consideration for that. Also browsing through other threads, I did not see any such thing like city allowance. Is it tax deductable or will we have to pay FBT(fringe benefit tax) on this.
From United States, Saint Louis
Hi Vishal,
CCA is an allowance given to an employee to compensate the rise in the cost of living in a given city. It is given to the employee at the discretion of the Management.
The Objective of including this salary element is to provide additional amount to meet high expenses of employee living in metro cities like Mumbai/Delhi/Bangalore etc.
It is taxable.
usually companies fix the amount of CCA and it is completely the management's decision.
refer to this thread also: https://www.citehr.com/388222-cca.html
Regards,
Ekta
From India, Delhi
CCA is an allowance given to an employee to compensate the rise in the cost of living in a given city. It is given to the employee at the discretion of the Management.
The Objective of including this salary element is to provide additional amount to meet high expenses of employee living in metro cities like Mumbai/Delhi/Bangalore etc.
It is taxable.
usually companies fix the amount of CCA and it is completely the management's decision.
refer to this thread also: https://www.citehr.com/388222-cca.html
Regards,
Ekta
From India, Delhi
Vishal,
plan your components of salary in such way so that it consists of some allowance which is paid for some difficult job or involving some risk eliments, than it will be non taxable
Regards
Pabitra
From India, Durgapur
plan your components of salary in such way so that it consists of some allowance which is paid for some difficult job or involving some risk eliments, than it will be non taxable
Regards
Pabitra
From India, Durgapur
Hi
Thanks for your responses. But somehow I am still confused. I wish to know about the Fringe tax benefit. Is this tax still apllicable.
If yes, then what I think is that keeping the special allowance will help me put a lessor tax burden on my emplyoyee. As I understand the FBT is to be paid by the employer, but I can always make it a part of employees CTC. This way the employee in broad terms in paying FTB instead of income tax. So he is saving a lot of money.
Can you elaborate on this. I have read so many approaches to break up the salary. Some keep basic salary as 50% of CTC, some 40% and some 30%. What is the fundamantal behind all this. I know EXACTLY what I want. I want my employee to pay minimum on taxes so that he can take maximum home. In a nutshell I want the actual payout close to the CTC .
I will appreciate if anyone can explain me this. Thanks in anticipation.
Some info: My company is in Noida. I dont know if it comes under metro or not. And if there are any state taxes too.
Vishal
From United States, Saint Louis
Thanks for your responses. But somehow I am still confused. I wish to know about the Fringe tax benefit. Is this tax still apllicable.
If yes, then what I think is that keeping the special allowance will help me put a lessor tax burden on my emplyoyee. As I understand the FBT is to be paid by the employer, but I can always make it a part of employees CTC. This way the employee in broad terms in paying FTB instead of income tax. So he is saving a lot of money.
Can you elaborate on this. I have read so many approaches to break up the salary. Some keep basic salary as 50% of CTC, some 40% and some 30%. What is the fundamantal behind all this. I know EXACTLY what I want. I want my employee to pay minimum on taxes so that he can take maximum home. In a nutshell I want the actual payout close to the CTC .
I will appreciate if anyone can explain me this. Thanks in anticipation.
Some info: My company is in Noida. I dont know if it comes under metro or not. And if there are any state taxes too.
Vishal
From United States, Saint Louis
Hi Roshni,
the salary break up which given in the attachment by by Ekta is not the right, there are some components mentioned are not matching i.e. HRA it should be 40% of Basic or 50% of basic in case of A1 Cities. adn some components are there those should be mentioned here for their tax benefits. i suggest you to kindly go through income tax act and the frame a break up of salary. The salary must be framed such a way so as to help the employer and employees both in all manners. I shall tell you more abt it later as i am busy right now
regards
Yash
From India, Delhi
the salary break up which given in the attachment by by Ekta is not the right, there are some components mentioned are not matching i.e. HRA it should be 40% of Basic or 50% of basic in case of A1 Cities. adn some components are there those should be mentioned here for their tax benefits. i suggest you to kindly go through income tax act and the frame a break up of salary. The salary must be framed such a way so as to help the employer and employees both in all manners. I shall tell you more abt it later as i am busy right now
regards
Yash
From India, Delhi
Dear Mr Vishal
1. There is no FBT now
2. Teher are no big tax concessions be it Metro or non metro
3. Do not worry too much about tax saving for the employee. He must plan his tax and not you
Salary Structure must take into consideratoon the following
1. His/Her skill and experiene level and market conditions
2. Motivate him to perform
3. Certain elements to ensure that he stays with you
4.Social responsibility like pf medical etc
Basic Pay
30 to 35% of CTC might be assigned to Basic 50% is ok at lower salary levels but at higher levels keeping it at 30 to 35% will help an organisation to maintain poarity
Monthly Allowances
30% of CTc could be assigned towards Some organisations give this as Flexi allowance Amount is constant but it gives flexibility for an employee to assigne amount as per his tax saving plans If you want to plan and give, then you can give under HRA, Education Allowance Conveyance
Annual Allowances
5% of CTC could be under this head This will include LTA(tax exemption)Medical(Tax exemption)Attire allowance(Tax exemption)
This also helps you to defer your expenses to the next year and also help you to release after the employee stays with you for a year This may not be applicale in case of medical but certainly in attire and LTA you can release the payment only if the employee stays with you for a year
Performance Pay
At the CTC level indicated by you, plan for 15 to 20% towards performane pay
Social Security
this will be closer to 10% of CTC In this case PF act is not applicable However I recommend inclusion of all employees under PF This helps in Tax reduction and also future saving Medical insurance for hospitalisation need to be planned and the premium you pay towards medical insurance is exempted from tax
With my experience, I estimate approximately 10 to 15% of CTC will be taxable subject to the employees savings Housing loan HRA and certain annual benefits and it is everyon's responsibility to pay to that extent as a citizen
Thanks
Sivasankaran
From India, Chennai
1. There is no FBT now
2. Teher are no big tax concessions be it Metro or non metro
3. Do not worry too much about tax saving for the employee. He must plan his tax and not you
Salary Structure must take into consideratoon the following
1. His/Her skill and experiene level and market conditions
2. Motivate him to perform
3. Certain elements to ensure that he stays with you
4.Social responsibility like pf medical etc
Basic Pay
30 to 35% of CTC might be assigned to Basic 50% is ok at lower salary levels but at higher levels keeping it at 30 to 35% will help an organisation to maintain poarity
Monthly Allowances
30% of CTc could be assigned towards Some organisations give this as Flexi allowance Amount is constant but it gives flexibility for an employee to assigne amount as per his tax saving plans If you want to plan and give, then you can give under HRA, Education Allowance Conveyance
Annual Allowances
5% of CTC could be under this head This will include LTA(tax exemption)Medical(Tax exemption)Attire allowance(Tax exemption)
This also helps you to defer your expenses to the next year and also help you to release after the employee stays with you for a year This may not be applicale in case of medical but certainly in attire and LTA you can release the payment only if the employee stays with you for a year
Performance Pay
At the CTC level indicated by you, plan for 15 to 20% towards performane pay
Social Security
this will be closer to 10% of CTC In this case PF act is not applicable However I recommend inclusion of all employees under PF This helps in Tax reduction and also future saving Medical insurance for hospitalisation need to be planned and the premium you pay towards medical insurance is exempted from tax
With my experience, I estimate approximately 10 to 15% of CTC will be taxable subject to the employees savings Housing loan HRA and certain annual benefits and it is everyon's responsibility to pay to that extent as a citizen
Thanks
Sivasankaran
From India, Chennai
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Typical salary breakup.jpg
Salary breakup.xls
Salary Breakup Annexure.doc