Hello to all,
I have a few technical questions re. comp & ben in India;
- in the contracts, do you need to detail the CTC, ie basic salary, HRA, medical reimbursement... or can you just put one line of payment for everything,
- from a payroll perspective, I guess you then need to detail in order to pay the PF, gratuity and so on ?
- for the allowance part, what about if you just want to give a lump sum payment with no detailed breakdown of allowances and of course no opportunity to tax optimise for the employees; is this legal?
Thank you in advance to anyone who might have the answers to these questions...
Jean
From France, Paris
I have a few technical questions re. comp & ben in India;
- in the contracts, do you need to detail the CTC, ie basic salary, HRA, medical reimbursement... or can you just put one line of payment for everything,
- from a payroll perspective, I guess you then need to detail in order to pay the PF, gratuity and so on ?
- for the allowance part, what about if you just want to give a lump sum payment with no detailed breakdown of allowances and of course no opportunity to tax optimise for the employees; is this legal?
Thank you in advance to anyone who might have the answers to these questions...
Jean
From France, Paris
Jean,
It is possible to structure the pay the way you like. Please remember that the statutory deductions and employer contributions like PF, Gratuity is dependant on the basic salary. The higher the basic, the higher these "retiral" benefits.
The benefit of splitting the salary into various components is to give the employee tax benefits e.g. for House Rent Allowance, Medical Reimbursement, Transportation (upto Rs. 800 only though).
It is possible to structure the pay the way you like. Please remember that the statutory deductions and employer contributions like PF, Gratuity is dependant on the basic salary. The higher the basic, the higher these "retiral" benefits.
The benefit of splitting the salary into various components is to give the employee tax benefits e.g. for House Rent Allowance, Medical Reimbursement, Transportation (upto Rs. 800 only though).
Hello Rsankara,
Thank you very much for your quick response. That was very helpful to clarify this "technical" aspect ! I will manage to reach my objective of reducing administrative work for our Engineering centre in Bangalore.
:D
Thanks again
Best regards
Jean
------------------------------------------------------------------------------------
From France, Paris
Thank you very much for your quick response. That was very helpful to clarify this "technical" aspect ! I will manage to reach my objective of reducing administrative work for our Engineering centre in Bangalore.
:D
Thanks again
Best regards
Jean
------------------------------------------------------------------------------------
From France, Paris
Jean
Are you are talking about compensation and benefits for Indian employees or for expatriates? Are the appointments contractual or permanent? How many employees/expatriates are involved?
Your compensation & benefits packages can only then be structured. Being too hasty is going to lead to a lot of difficulties.
If you wish, contact me at
and I will be able to advise you in more detail.
Jeroo
From India, Mumbai
7Are you are talking about compensation and benefits for Indian employees or for expatriates? Are the appointments contractual or permanent? How many employees/expatriates are involved?
Your compensation & benefits packages can only then be structured. Being too hasty is going to lead to a lot of difficulties.
If you wish, contact me at
Jeroo
From India, Mumbai
Hi Jean,
Welcome to Citehr :) .
Yes, it is advisable to give the detailed break -ups detailing the monthly and annual payouts. It is pertinent and avoid the confusing issues and leave the door open for future "negotiations".
Yes.
Gratuity shouldn't be a part of the payroll - as it is statutory payable to the employee if he/she completes 5 years of continous services with the company.
Jean, since we are not sure the nature & type of allowances you have in mind - therefore it is advisable to give the break up for two reasons -
a. Some of the allowances have Income Tax implications like LTA & other allowances are exmpted from IT - Medical allowance/reimbursement is exempted from Tax upto Rs 15,000 p.a., Conveyance allowance upto Rs 800/ per month, Child aducation allowance upto Rs 100 per month per child upto two children etc.
b. If you are providing other allowances like Professional Development allowance, Clothing allowance etc..these would have Fringe Benefit Tax implications which is payable by the company.
As Jeero rightly mentioned - "Being too hasty is going to lead to a lot of difficulties" .
Hope this has answered some of your issues.
Have a great day.
Regards,
Rajat Joshi
From India, Pune
Welcome to Citehr :) .
Yes, it is advisable to give the detailed break -ups detailing the monthly and annual payouts. It is pertinent and avoid the confusing issues and leave the door open for future "negotiations".
Yes.
Gratuity shouldn't be a part of the payroll - as it is statutory payable to the employee if he/she completes 5 years of continous services with the company.
Jean, since we are not sure the nature & type of allowances you have in mind - therefore it is advisable to give the break up for two reasons -
a. Some of the allowances have Income Tax implications like LTA & other allowances are exmpted from IT - Medical allowance/reimbursement is exempted from Tax upto Rs 15,000 p.a., Conveyance allowance upto Rs 800/ per month, Child aducation allowance upto Rs 100 per month per child upto two children etc.
b. If you are providing other allowances like Professional Development allowance, Clothing allowance etc..these would have Fringe Benefit Tax implications which is payable by the company.
As Jeero rightly mentioned - "Being too hasty is going to lead to a lot of difficulties" .
Hope this has answered some of your issues.
Have a great day.
Regards,
Rajat Joshi
From India, Pune
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
PMS COmpensation and Benefits.doc
Certified Compensation & Benefits Manager.pdf