Respected Seniors,
I would like to know what the different categories or components are in designing the salary head for the purpose of calculations such as EPF, Gratuity calculation, Tax deduction, etc.
The (Basic + DA) is also taken into account while calculating EPF presently in my organization. Can it only be calculated from Basic only, excluding DA?
I want to know WHY companies, mostly private companies, don't have DA in their salary structure. What is the actual logic behind that?
Lastly, is there any Salary Head Name which is not TAXABLE? (which might benefit the employee in saving the take-home pay!)
Sangita
From India, Imphal
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I would like to know what the different categories or components are in designing the salary head for the purpose of calculations such as EPF, Gratuity calculation, Tax deduction, etc.
The (Basic + DA) is also taken into account while calculating EPF presently in my organization. Can it only be calculated from Basic only, excluding DA?
I want to know WHY companies, mostly private companies, don't have DA in their salary structure. What is the actual logic behind that?
Lastly, is there any Salary Head Name which is not TAXABLE? (which might benefit the employee in saving the take-home pay!)
Sangita
From India, Imphal
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Dear Sangita,
A.
1. Basic - 40% of the gross salary
2. HRA - 50% of basic in metro and 40% non-metro
3. Conveyance - $800 fixed per month
4. Medical Allowance - $1250 fixed per month
5. LTA (subject to company policy and entitlement) - 8.33% of Basic
6. Superannuation (Subject to company policy) - can be 3% - 6% of basic
7. PF (Subject to company policy) - 12% of basic (employee contribution)
8. Flexible component - it's a fixed amount like driver, petrol reimbursements
B.
Gratuity calculation is as follows:
Gratuity = (Basic + DA) * 15 / 26 % * (No. of years completed)
Regards,
Sarfaraz
Manager HR
Vardhman Pharma
Bangalore
From India, Bangalore
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3A.
1. Basic - 40% of the gross salary
2. HRA - 50% of basic in metro and 40% non-metro
3. Conveyance - $800 fixed per month
4. Medical Allowance - $1250 fixed per month
5. LTA (subject to company policy and entitlement) - 8.33% of Basic
6. Superannuation (Subject to company policy) - can be 3% - 6% of basic
7. PF (Subject to company policy) - 12% of basic (employee contribution)
8. Flexible component - it's a fixed amount like driver, petrol reimbursements
B.
Gratuity calculation is as follows:
Gratuity = (Basic + DA) * 15 / 26 % * (No. of years completed)
Regards,
Sarfaraz
Manager HR
Vardhman Pharma
Bangalore
From India, Bangalore
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Dear Sangita,
Following may be the components in the salary:
Basic (@40%-50%) of Gross CTC, HRA (@50%) of Basic, Transport Allowance 800 fixed (Exempted from I.T.), LTA @ 8.33% or Max. Rs. 5000 pm (Exempted if claimed every alternate year with the proof of travel), Uniform Allowance not fixed (Total Taxable), washing allowance (Taxable), Medical Reimbursement @ 8.33% of basic or max 1250 pm non-taxable, Bonus @ 8.33% for Commercial units & 20% in factories, PF @ 12% of BASIC + DA (May be limited up to Rs. 6500 as per EPF current limit) depends upon company policy.
The (Basic + DA) is also taken into account while calculating EPF presently in my organization (Can it only be calculated only from Basic only excluding DA) - NO, (DA an allowance linked with Basic & is part of BASIC applicable in Govt. Organizations, Public Sectors & organizations where labor unions are active & do negotiations & generally DA revisions done in that negotiation i.e. 10% of basic, 15% of basic like that).
I want to know WHY companies, mostly private companies, don't have DA in their salary structure? What is the Actual Logic behind that? - Mostly private organizations fix the salary in terms of CTC & negotiate on gross salary (CTC) & also there is no DA as part of the salary head.
Lastly, is there any Salary Head Name which is not TAXABLE? (which might be benefiting to an employee in saving the take-home pay!
All allowances are taxable & all reimbursements are non-taxable.
Ajay Pal Singh
Head - HR & Admin
attribution https://www.citehr.com/465481-salary...#ixzz2YdjnGINM
From India, Delhi
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Following may be the components in the salary:
Basic (@40%-50%) of Gross CTC, HRA (@50%) of Basic, Transport Allowance 800 fixed (Exempted from I.T.), LTA @ 8.33% or Max. Rs. 5000 pm (Exempted if claimed every alternate year with the proof of travel), Uniform Allowance not fixed (Total Taxable), washing allowance (Taxable), Medical Reimbursement @ 8.33% of basic or max 1250 pm non-taxable, Bonus @ 8.33% for Commercial units & 20% in factories, PF @ 12% of BASIC + DA (May be limited up to Rs. 6500 as per EPF current limit) depends upon company policy.
The (Basic + DA) is also taken into account while calculating EPF presently in my organization (Can it only be calculated only from Basic only excluding DA) - NO, (DA an allowance linked with Basic & is part of BASIC applicable in Govt. Organizations, Public Sectors & organizations where labor unions are active & do negotiations & generally DA revisions done in that negotiation i.e. 10% of basic, 15% of basic like that).
I want to know WHY companies, mostly private companies, don't have DA in their salary structure? What is the Actual Logic behind that? - Mostly private organizations fix the salary in terms of CTC & negotiate on gross salary (CTC) & also there is no DA as part of the salary head.
Lastly, is there any Salary Head Name which is not TAXABLE? (which might be benefiting to an employee in saving the take-home pay!
All allowances are taxable & all reimbursements are non-taxable.
Ajay Pal Singh
Head - HR & Admin
attribution https://www.citehr.com/465481-salary...#ixzz2YdjnGINM
From India, Delhi
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Thank you, Mr. Sarfaraz and Mr. Ajay Pal Singh, for your prompt reply.
And to all dear seniors, I have a few more contradictions on salary designing, viz:
As designing the basic salary is highly crucial in identifying the employee positions (designation), mode of increment as per the level of his/her position, as well as EPF and Gratuity contribution, etc.
Q1. I would like to understand "what is the starting minimum amount of Basic" (heard that it has to be not lesser than the residing State wages - skill-wise)?
Q2. I have seen in my previous work that the basic salary is paid lower, although a fixed amount is added annually to the base on the employee positions (along with the usual increment). But as indicated by both of you, usually, the basic can be 40% to 50% of the Gross CTC. Is that a mandatory compliance? (Keeping the fact that lowering the Basic will result in less contribution from the Employer)
Q3. I still want to know why companies, mostly private companies, don't have DA in their salary structure? What is the actual logic behind that?
Q4. As gratuity payment in Pvt Ltd. companies is mandatory, the same as EPF regulations, is payment of gratuity through LIC premium a good option? What are the pros and cons?
Q5. Heard that new Registration in Gratuity Membership stopped from 1st July 2013 as per new IRDA Guidelines. Please confirm the same.
Please simplify...
Thank you.
From India, Imphal
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And to all dear seniors, I have a few more contradictions on salary designing, viz:
As designing the basic salary is highly crucial in identifying the employee positions (designation), mode of increment as per the level of his/her position, as well as EPF and Gratuity contribution, etc.
Q1. I would like to understand "what is the starting minimum amount of Basic" (heard that it has to be not lesser than the residing State wages - skill-wise)?
Q2. I have seen in my previous work that the basic salary is paid lower, although a fixed amount is added annually to the base on the employee positions (along with the usual increment). But as indicated by both of you, usually, the basic can be 40% to 50% of the Gross CTC. Is that a mandatory compliance? (Keeping the fact that lowering the Basic will result in less contribution from the Employer)
Q3. I still want to know why companies, mostly private companies, don't have DA in their salary structure? What is the actual logic behind that?
Q4. As gratuity payment in Pvt Ltd. companies is mandatory, the same as EPF regulations, is payment of gratuity through LIC premium a good option? What are the pros and cons?
Q5. Heard that new Registration in Gratuity Membership stopped from 1st July 2013 as per new IRDA Guidelines. Please confirm the same.
Please simplify...
Thank you.
From India, Imphal
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Dear Mme,
Please refer to your query on salary. The statute mandates the minimum wages to be paid to employees, and beyond a certain number of permanent employees, the company is obligated to enroll in PF and ESI.
As far as DA is concerned, it is a component built along with the basic salary for government employees to adjust for inflation periodically, given that generally, government employees receive lower salaries. In the case of private companies, since the globalization era, average salaries are significantly higher, and the necessity for DA and bonuses has rarely arisen.
Thanks and regards,
S. Ganapathy,
Visisht Corporate Growth Associates
Management, Business & HR Consultants
VALUE INNOVATION THROUGH PEOPLE & PROCESSES
From India, Hyderabad
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Please refer to your query on salary. The statute mandates the minimum wages to be paid to employees, and beyond a certain number of permanent employees, the company is obligated to enroll in PF and ESI.
As far as DA is concerned, it is a component built along with the basic salary for government employees to adjust for inflation periodically, given that generally, government employees receive lower salaries. In the case of private companies, since the globalization era, average salaries are significantly higher, and the necessity for DA and bonuses has rarely arisen.
Thanks and regards,
S. Ganapathy,
Visisht Corporate Growth Associates
Management, Business & HR Consultants
VALUE INNOVATION THROUGH PEOPLE & PROCESSES
From India, Hyderabad
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SALARY SHEET CALCULATION.xls
Salary calculation.doc