hello everyone..m a fresher working as hr in IT co. and i have to prepare salary structure for my company..but i don't how to work on this..i have prepared a salary structure which is still incomplete..please guide me on how can improve it..what all can i add and remove..
Name of Employee
Employee code
Gender
Days Worked
Fixed Salary
Bonus
CTC
Per Month (Rs.)
A. Salary
Basic Salary
HRA 40% of (Basic salary+ DA if terms of employment so provides+commission based on a fixed percentage of trunover)
Special Allowance
Transport Allowance
Sub Total B. Benefits :
Provident Fund 12%of basic salary
Gratuity basic *15/26*years of service(after 5 years)
Sub Total
C. Flexible Benefit Plan :
1.Yearly FBP
Medical Expenses
Mediclaim Insurance
LTA
Sub Total Total Pay package (A+B+C)
From India, Jaipur
10Name of Employee
Employee code
Gender
Days Worked
Fixed Salary
Bonus
CTC
Per Month (Rs.)
A. Salary
Basic Salary
HRA 40% of (Basic salary+ DA if terms of employment so provides+commission based on a fixed percentage of trunover)
Special Allowance
Transport Allowance
Sub Total B. Benefits :
Provident Fund 12%of basic salary
Gratuity basic *15/26*years of service(after 5 years)
Sub Total
C. Flexible Benefit Plan :
1.Yearly FBP
Medical Expenses
Mediclaim Insurance
LTA
Sub Total Total Pay package (A+B+C)
From India, Jaipur
Hi Neha, See the attached breakup structure it helps you a lot or u can discuss it more.
From India, Gurgaon
From India, Gurgaon
Dear Harmeet,
A very good format provided.
The basic fundamentals for any salary structure should be :
Easy to understand
Transparent of deductions
Separation on Earnings & Benefits.
For this one should divide the Salary structure accordingly into :
Group A : Gross Salary ( Basic , HRA , Conveyance , Special Allowance )
For this group
- Basic should be either as per the Min. wages or 25% of Total Gurrantied Cash to employee.
- HRA should be 50% of the Baisc amount
- Conveyance fixed 900 pm ( as per I tax )
- Special / Adhoc allowance is the remaining amount of gross salary.
Group B : Tax Benefits
- Mediclaim ( 1250 pm fixed as per I Tax )
- LTA ( can range btw 15 k pa to 30 k pa depending on the total salary ctc and tax saving of empl. )
- Ex Gratia ( depends on org amount fixed , standard 8.33% of basic )
Group A + B will provide the Cash Payable to employee
Group C : Contributions
- PF
The Total of Group A+ B + C provides the Annual Gurrantied Cash
Group D - Variables
- Performance Bonus
- Incentives
Total of A+B+C+D gives The Cost to Company
Group E - Employee Benefits
- Group Medical scheme
- Life security Plan
- Gratuity
- Staff discount
- Others
Total of Group A+B+C+D+E = Total Cost to Company
Employee benefits / Fringe benefits provided by company can be added in Group E.
Hope this explains the basic principles on Salary strcturing.
Regards,
Shridhar
From India, Mumbai
A very good format provided.
The basic fundamentals for any salary structure should be :
Easy to understand
Transparent of deductions
Separation on Earnings & Benefits.
For this one should divide the Salary structure accordingly into :
Group A : Gross Salary ( Basic , HRA , Conveyance , Special Allowance )
For this group
- Basic should be either as per the Min. wages or 25% of Total Gurrantied Cash to employee.
- HRA should be 50% of the Baisc amount
- Conveyance fixed 900 pm ( as per I tax )
- Special / Adhoc allowance is the remaining amount of gross salary.
Group B : Tax Benefits
- Mediclaim ( 1250 pm fixed as per I Tax )
- LTA ( can range btw 15 k pa to 30 k pa depending on the total salary ctc and tax saving of empl. )
- Ex Gratia ( depends on org amount fixed , standard 8.33% of basic )
Group A + B will provide the Cash Payable to employee
Group C : Contributions
- PF
The Total of Group A+ B + C provides the Annual Gurrantied Cash
Group D - Variables
- Performance Bonus
- Incentives
Total of A+B+C+D gives The Cost to Company
Group E - Employee Benefits
- Group Medical scheme
- Life security Plan
- Gratuity
- Staff discount
- Others
Total of Group A+B+C+D+E = Total Cost to Company
Employee benefits / Fringe benefits provided by company can be added in Group E.
Hope this explains the basic principles on Salary strcturing.
Regards,
Shridhar
From India, Mumbai
Thanx..the salary structure provided by you is really good.it has helped a lot.. Please clarify one thing : In that structure gratuity is fixed @4.81%..so i want to ask is it fixed or this formula is used to calculate gratuity basic *15/26*years of service(after 5 years)
From India, Jaipur
From India, Jaipur
Thanx..i need to ask few questions..in the information provided by you..you have given that mediclaim & conveyance allowance as fixed amount..so is it fixed for everyone or it depends on company??
second thing i want to ask is the amount of LTA..is there any amount fixed or we can have any amount fixed for that purpose..
From India, Jaipur
second thing i want to ask is the amount of LTA..is there any amount fixed or we can have any amount fixed for that purpose..
From India, Jaipur
Also please let me know is gratuity payable only after 5 years of service as the formula says basic *15/26*years of service(after 5 years) thanx in advance
From India, Jaipur
From India, Jaipur
Mediclaim is a Income Tax benefit fixed for all grades and roles as 15,000 pm max.
Conveyance is also a fixed amount as 9600/- per annum for employees not availing a Car Beenfit.
Gratuity is a issue for the company to decide, modern organizations fix the amount as 4.81% and keep it standard and release if employee completes 11 months.
But as per the law the calculations are different with qualifying period as 5 years.
Regards,
Shridhar
From India, Mumbai
Conveyance is also a fixed amount as 9600/- per annum for employees not availing a Car Beenfit.
Gratuity is a issue for the company to decide, modern organizations fix the amount as 4.81% and keep it standard and release if employee completes 11 months.
But as per the law the calculations are different with qualifying period as 5 years.
Regards,
Shridhar
From India, Mumbai
thanx shridhar for your wonderful support..need some more help related to LTA..what should be the amount of LTA.. does company fixes it or there are some laws related to it??? & one more thing you have said conveyance allowance is 9600 fixed.. but in the above salary structure it is mentioned 900 pm which is equal to Rs 10800..so which one should i consider??
From India, Jaipur
From India, Jaipur
Question about LTA is not simply putting a amount but, the purpose need to be defined. It is a Tax benefit but only if it is claimed as proof.
What is amount a employee is able to cliam is the question needed to be checked at different levels.
Most organizations put 10k for all senior executives to Asst. manager in a salary band of 3 lac to 7 lac. Since the Tax benefit is " 2 times in a block of 4 yrs" the accumulated amount is not very high even if he cannot take the tax benefit.
For all Higher levels the Amount can increase from 20k to 40 k depending on the CTC of the person and his ability to consume or benefit the Tax savings.
The IT Tax only have guidelines of claiming the LTA benefit for taxation.
- Only Domestic Travel is allowed.
- Only Air or Train travel is acceptable.
- Designated Tour Operators are allowed to offer packages of all inclusive expences on Domestic circuits.
In case one want to hire a car or vehicle, the max permissible Limit is a 1st AC straight train charges for the Travel.
It is the organization whiles files the I Tax for the employees hence it decideds what is acceptable and what it will not accept as Bills or proof of Travel as it will held responsible for answering the Income Tax queries.
In conveyance please accpet a correction 800 pm which is 9600 pa.
Regards,
From India, Mumbai
What is amount a employee is able to cliam is the question needed to be checked at different levels.
Most organizations put 10k for all senior executives to Asst. manager in a salary band of 3 lac to 7 lac. Since the Tax benefit is " 2 times in a block of 4 yrs" the accumulated amount is not very high even if he cannot take the tax benefit.
For all Higher levels the Amount can increase from 20k to 40 k depending on the CTC of the person and his ability to consume or benefit the Tax savings.
The IT Tax only have guidelines of claiming the LTA benefit for taxation.
- Only Domestic Travel is allowed.
- Only Air or Train travel is acceptable.
- Designated Tour Operators are allowed to offer packages of all inclusive expences on Domestic circuits.
In case one want to hire a car or vehicle, the max permissible Limit is a 1st AC straight train charges for the Travel.
It is the organization whiles files the I Tax for the employees hence it decideds what is acceptable and what it will not accept as Bills or proof of Travel as it will held responsible for answering the Income Tax queries.
In conveyance please accpet a correction 800 pm which is 9600 pa.
Regards,
From India, Mumbai
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Creating a Competitive Salary Structure.doc
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