Issue on Full n Final Settlement
Dear All,
We have an employee whose salary was broken into 2phases to save on tax.
appointment letter was issued in his name and another one is his wifes's name. His wife is not an employee.
For eg x - CTC was 42000
Y(wife) - CTC was 29000
1)Just wanted to know now when the employee takes a leave will the deduction happen on both the above CTC's
2) At the time of full n final settlement if PL is left to be paid(15 days PL)
Now will the calculation be done only on X's CTC or on both the CTC's
3) If the employee has completed his service and his applicable for Gratuity will the calculation imply on both the CTC's or only on X's CTC
From India, Mumbai
Dear All,
We have an employee whose salary was broken into 2phases to save on tax.
appointment letter was issued in his name and another one is his wifes's name. His wife is not an employee.
For eg x - CTC was 42000
Y(wife) - CTC was 29000
1)Just wanted to know now when the employee takes a leave will the deduction happen on both the above CTC's
2) At the time of full n final settlement if PL is left to be paid(15 days PL)
Now will the calculation be done only on X's CTC or on both the CTC's
3) If the employee has completed his service and his applicable for Gratuity will the calculation imply on both the CTC's or only on X's CTC
From India, Mumbai
Hi Selvin,
From HR point of view do not encourage this type case in your organisation.
Since you have issued separate appointment letters to them, it shows they are 2 separate employees of the Company with the separate Employee Codes.
This is a mutual understanding between the employee & the Company.
1)Just wanted to know now when the employee takes a leave will the deduction happen on both the above CTC's - Since both are separate employees so you have to mark Leave without Pay to both of them for the same date. ( You have to exhaust his wife's leave on annual basis based upon how much leave he has balance in his account)
2) At the time of full n final settlement if PL is left to be paid(15 days PL)
Now will the calculation be done only on X's CTC or on both the CTC's - If you will practice the above while doing the F&F both have same number of Leave balance in their accounts. Both the employees have to give the resignation and you have to settle their accounts separately.
3) If the employee has completed his service and his applicable for Gratuity will the calculation imply on both the CTC's or only on X's CTC - Based on the above you can settle their accounts.
It will give the impact on his actual salary (including both).
For further clarification kindly send mail to me on
Amaresh
4From HR point of view do not encourage this type case in your organisation.
Since you have issued separate appointment letters to them, it shows they are 2 separate employees of the Company with the separate Employee Codes.
This is a mutual understanding between the employee & the Company.
1)Just wanted to know now when the employee takes a leave will the deduction happen on both the above CTC's - Since both are separate employees so you have to mark Leave without Pay to both of them for the same date. ( You have to exhaust his wife's leave on annual basis based upon how much leave he has balance in his account)
2) At the time of full n final settlement if PL is left to be paid(15 days PL)
Now will the calculation be done only on X's CTC or on both the CTC's - If you will practice the above while doing the F&F both have same number of Leave balance in their accounts. Both the employees have to give the resignation and you have to settle their accounts separately.
3) If the employee has completed his service and his applicable for Gratuity will the calculation imply on both the CTC's or only on X's CTC - Based on the above you can settle their accounts.
It will give the impact on his actual salary (including both).
For further clarification kindly send mail to me on
Amaresh
Hi Selvin,
There are many other ways to save tax, and I doubt this is legal. Anyway, since you asked, here are my thoughts.
1)Just wanted to know now when the employee takes a leave will the deduction happen on both the above CTC's- The deduction will happen from both CTCs, else the employee actually gets to take double the leave available to him.
2) At the time of full n final settlement if PL is left to be paid(15 days PL)
Now will the calculation be done only on X's CTC or on both the CTC's- PL has to be paid for only one person. Again, you cannot permit the employee to get benefited from leave encashment that he is not really eligible for.
3) If the employee has completed his service and his applicable for Gratuity will the calculation imply on both the CTC's or only on X's CTC- On both the CTCs.
Regards,
Sree
From India, Madras
There are many other ways to save tax, and I doubt this is legal. Anyway, since you asked, here are my thoughts.
1)Just wanted to know now when the employee takes a leave will the deduction happen on both the above CTC's- The deduction will happen from both CTCs, else the employee actually gets to take double the leave available to him.
2) At the time of full n final settlement if PL is left to be paid(15 days PL)
Now will the calculation be done only on X's CTC or on both the CTC's- PL has to be paid for only one person. Again, you cannot permit the employee to get benefited from leave encashment that he is not really eligible for.
3) If the employee has completed his service and his applicable for Gratuity will the calculation imply on both the CTC's or only on X's CTC- On both the CTCs.
Regards,
Sree
From India, Madras
Dear Selvin,
I think whatever your company has done is illegal on face of it.
You will have to process both the employees separately, because both of them ought to be on roll separately. I do not find any complexity in this. Just treat it as two employees leaving at same time. Thats it.
Regards,
Hrishikesh
From India, Nagpur
I think whatever your company has done is illegal on face of it.
You will have to process both the employees separately, because both of them ought to be on roll separately. I do not find any complexity in this. Just treat it as two employees leaving at same time. Thats it.
Regards,
Hrishikesh
From India, Nagpur
Just Wonder. Is this legal. Its really unheard of.
It would be really dangerous for your company if found out during audit since you are helping employee evade taxs, If am not wrong.
I guess your company is taking quite a risk to save employees tax and additional paying extra from the pocket. Creating fictitious employee would mean that you would be paying addition PF/Gratuity. Its complex.
Can someone give some insite into this Please. It really surprised me.
From India, Pune
It would be really dangerous for your company if found out during audit since you are helping employee evade taxs, If am not wrong.
I guess your company is taking quite a risk to save employees tax and additional paying extra from the pocket. Creating fictitious employee would mean that you would be paying addition PF/Gratuity. Its complex.
Can someone give some insite into this Please. It really surprised me.
From India, Pune
Dear Selvin,
I think no HR or management will accept this kind of process for any of the company.
But to clarify the doubts please find below suggestions and findings.
Reference to your posting you have clearly mentioned that you have divided the salary and showed that Husband and wife both are working in the same company. If this is the case you need to see that you have entered the names of both the employees in the attendance register and they are signing (This is from the perspective of the auditors and Labor Laws) do the company have the personal records of both the employees.
When it come to leaves both are different and you can't merge both the accounts for leave and deduct. As per your statement the employee wife is not working in the company, so if you have maintained the attendance then obviously you will be marked absent in the column in the employees wife records
you can't take count for the husbands and wife's leave and do the full & final settlement in case of PL or earned leave. It should be taken separately to settle and the deductions of leave will also be separate according to the records.
Always the records or the documents stand in the court of law.
About the gratuity I am not very sure, so I don't want say anything on that.
Regards
Deepak
From India, Bangalore
I think no HR or management will accept this kind of process for any of the company.
But to clarify the doubts please find below suggestions and findings.
Reference to your posting you have clearly mentioned that you have divided the salary and showed that Husband and wife both are working in the same company. If this is the case you need to see that you have entered the names of both the employees in the attendance register and they are signing (This is from the perspective of the auditors and Labor Laws) do the company have the personal records of both the employees.
When it come to leaves both are different and you can't merge both the accounts for leave and deduct. As per your statement the employee wife is not working in the company, so if you have maintained the attendance then obviously you will be marked absent in the column in the employees wife records
you can't take count for the husbands and wife's leave and do the full & final settlement in case of PL or earned leave. It should be taken separately to settle and the deductions of leave will also be separate according to the records.
Always the records or the documents stand in the court of law.
About the gratuity I am not very sure, so I don't want say anything on that.
Regards
Deepak
From India, Bangalore
Dear Selvin
If you are showing both the names (Mr x & Mrs X),
seperately in the pay rolls :-
(a) ALL Leaves will be accounted in both the names
& can't be clubbed as one.
(b) Same above as for the deductions also
(c) Gratutity also to be calculated seperately.
IT is advised to make the second part PAY as "Contract Employment"
which do not attract any statutory deductions other than the TDS
that too if it exceeds the prescribed limits. But this component of pay would not be calculated for Gratuty etc.,
From India, Hyderabad
If you are showing both the names (Mr x & Mrs X),
seperately in the pay rolls :-
(a) ALL Leaves will be accounted in both the names
& can't be clubbed as one.
(b) Same above as for the deductions also
(c) Gratutity also to be calculated seperately.
IT is advised to make the second part PAY as "Contract Employment"
which do not attract any statutory deductions other than the TDS
that too if it exceeds the prescribed limits. But this component of pay would not be calculated for Gratuty etc.,
From India, Hyderabad
Dear Seniors,
Thanks to you all to give your valuable ideas/thoughts.
Secondly this proces is totally illegal.
Once there are two appointment letter obviously as per the documnet there are two employee and accordingly all the dues and payment to be made including tatutory deductions,
Thanks and regards,
pranab
From India, Mumbai
Thanks to you all to give your valuable ideas/thoughts.
Secondly this proces is totally illegal.
Once there are two appointment letter obviously as per the documnet there are two employee and accordingly all the dues and payment to be made including tatutory deductions,
Thanks and regards,
pranab
From India, Mumbai
Without questioning as to why and how you did bifurcation, solve the problem once and for all by treating them as seperate entity ( hubby & wife ) having worked. Do not publishise lest you are penalised heavily by IT slethues !!
HC. SUBBARAMU
BANGALORU
From India, Kochi
HC. SUBBARAMU
BANGALORU
From India, Kochi
Dear friend
Had there been an award like the Nobel or Pulitzer Prize for violation of rules; you/your company would have won it !!!!
This is the MOST CREATIVE and INGENUIOUS practice for evading Tax and inflating EMPLOYEE COUNT, that I have ever come across.
By any chance, was there any exchange of such know-how or any Outsourcing arrangement with the erstwhile Satyam Computers service Ltd. ???
Kindly enlighten us more on this subject; as many members (including me) are not aware of such STRANGE practices.
Warm regards.
From India, Delhi
Had there been an award like the Nobel or Pulitzer Prize for violation of rules; you/your company would have won it !!!!
This is the MOST CREATIVE and INGENUIOUS practice for evading Tax and inflating EMPLOYEE COUNT, that I have ever come across.
By any chance, was there any exchange of such know-how or any Outsourcing arrangement with the erstwhile Satyam Computers service Ltd. ???
Kindly enlighten us more on this subject; as many members (including me) are not aware of such STRANGE practices.
Warm regards.
From India, Delhi
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Full n final settlement.doc
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