Hi Seniors,
I am working in a BPO outsourcing company as an HR professional. My Managing Director asked me to create a salary slip for him with a CTC of Rs. 2,100,00. I have included all the details as per the rules. Since it is a startup venture (4 months old), we do not have any PF or ESI. Kindly review the details below:
Rate of Salary/Wages
a) Basic - ₹84,000.00 (40%)
b) House Rent Allowance - ₹33,600.00 (40%)
c) Conveyance - ₹800.00
d) Medical Allowance - ₹1,250.00
e) Mobile Allowance - ₹5,000.00
f) Special Allowance - ₹90,350.00
Total CTC: ₹2,100,00.00
Seniors, please advise me on any additional changes or additions I need to make. Your prompt assistance is highly appreciated.
Regards,
Sangeeta Debnath.
From India, Bangalore
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4I am working in a BPO outsourcing company as an HR professional. My Managing Director asked me to create a salary slip for him with a CTC of Rs. 2,100,00. I have included all the details as per the rules. Since it is a startup venture (4 months old), we do not have any PF or ESI. Kindly review the details below:
Rate of Salary/Wages
a) Basic - ₹84,000.00 (40%)
b) House Rent Allowance - ₹33,600.00 (40%)
c) Conveyance - ₹800.00
d) Medical Allowance - ₹1,250.00
e) Mobile Allowance - ₹5,000.00
f) Special Allowance - ₹90,350.00
Total CTC: ₹2,100,00.00
Seniors, please advise me on any additional changes or additions I need to make. Your prompt assistance is highly appreciated.
Regards,
Sangeeta Debnath.
From India, Bangalore
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Hi Seniors,
Some more points are mentioned below:
1. As this calculation is for PER MONTH wise, the CTC will be Rs. 2,10,000 (Two Lakh Ten Thousand Rupees) per month. Kindly let me know about the calculation and deductions I need to consider.
2. He told me to create a 3-month salary slip as he wants to apply for a Credit Card.
3. He is the Managing Director and Founder of the Company.
4. There are no PF & ESI accounts.
I am a bit confused. Kindly help me out.
Thanks in advance.
Regards,
Sangeeta Debnath
From India, Bangalore
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Some more points are mentioned below:
1. As this calculation is for PER MONTH wise, the CTC will be Rs. 2,10,000 (Two Lakh Ten Thousand Rupees) per month. Kindly let me know about the calculation and deductions I need to consider.
2. He told me to create a 3-month salary slip as he wants to apply for a Credit Card.
3. He is the Managing Director and Founder of the Company.
4. There are no PF & ESI accounts.
I am a bit confused. Kindly help me out.
Thanks in advance.
Regards,
Sangeeta Debnath
From India, Bangalore
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Dear Sangeeta,
Bifurcation is fine as start up venture and you can add more tax free (Full or Partial) heads as mentioned below but i will suggest that you must fix the compensation policy first followed by grading system to avoid any hassle in future..
1. Basic - Income
Tax Benefit: Fully Taxable
2. House Rent Allowance (HRA) - Maximum 50% basic (Metro cities) 40% basic (non metro cities).
Tax Benefit:Excess of Actual rent paid over 10% of Basic salary OR Maximum HRA allowed (50% or 60% of basic) OR Actual Rent Paid – whichever is lower is Exempt from Tax.
3. Transport Allowance - Supposed to be conveyance allowance meant for transportation between office and residence only.
Tax Benefit:Exempt maximum up to Rs.800/- per month. No proof required.
4.Children’s education allowance - Tax Benefit: Rs.100 per child subject to max 2 children. Hence maximum Rs.200/- is exempt.
5. Medical Allowances / Reimbursements - Can be given against bills or without bills does not matter. Some companies give it monthly, some quarterly, half yearly or yearly also. Some companies give it only against medical bills, some do not ask for bills, rather bills are only demanded for Final Tax Computation at the end of the year. No thumb rule about it. Preferred to pay monthly, without bills and ask bills as per your wish, quarterly, half yearly or at the end of the year. Do not choose to give it against bills only, there is no rule for the same…It only makes salary processing a cumbersome process.
Tax Benefit: Maximum Rs.1250/- p.m. (Rs.15000 p.a.) is exempt only if Original Bills are provided.
6. Telephone Reimbursement: Exempted upto Rs.1500 per month( Need to produce bills)- Sec 10
7. Books & Periodical Reimbursement: Actual Expenses ( Need to Produce Bills)
8. VM Reimbursement: Actual Expenses ( Need to produce bills)
9. Special Allowances - Balancer (Fully Taxable)
From India, Kota
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Bifurcation is fine as start up venture and you can add more tax free (Full or Partial) heads as mentioned below but i will suggest that you must fix the compensation policy first followed by grading system to avoid any hassle in future..
1. Basic - Income
Tax Benefit: Fully Taxable
2. House Rent Allowance (HRA) - Maximum 50% basic (Metro cities) 40% basic (non metro cities).
Tax Benefit:Excess of Actual rent paid over 10% of Basic salary OR Maximum HRA allowed (50% or 60% of basic) OR Actual Rent Paid – whichever is lower is Exempt from Tax.
3. Transport Allowance - Supposed to be conveyance allowance meant for transportation between office and residence only.
Tax Benefit:Exempt maximum up to Rs.800/- per month. No proof required.
4.Children’s education allowance - Tax Benefit: Rs.100 per child subject to max 2 children. Hence maximum Rs.200/- is exempt.
5. Medical Allowances / Reimbursements - Can be given against bills or without bills does not matter. Some companies give it monthly, some quarterly, half yearly or yearly also. Some companies give it only against medical bills, some do not ask for bills, rather bills are only demanded for Final Tax Computation at the end of the year. No thumb rule about it. Preferred to pay monthly, without bills and ask bills as per your wish, quarterly, half yearly or at the end of the year. Do not choose to give it against bills only, there is no rule for the same…It only makes salary processing a cumbersome process.
Tax Benefit: Maximum Rs.1250/- p.m. (Rs.15000 p.a.) is exempt only if Original Bills are provided.
6. Telephone Reimbursement: Exempted upto Rs.1500 per month( Need to produce bills)- Sec 10
7. Books & Periodical Reimbursement: Actual Expenses ( Need to Produce Bills)
8. VM Reimbursement: Actual Expenses ( Need to produce bills)
9. Special Allowances - Balancer (Fully Taxable)
From India, Kota
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(Fact Checked)-The user has provided accurate information on tax benefits and allowances. No corrections needed. (1 Acknowledge point)
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Dear Sangeeta, Deduction you need take care of in salary Slip are as follows:- 1. Professional TAX 2. PF (If Applicable) 3. ESI (If Applicable)
From India, Kota
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From India, Kota
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(Fact Checked)-The user reply is correct. (1 Acknowledge point)
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Dear Akhil Sir,
Thanks for your valuable reply.
I need to know for Managing Director what should be the proper salary break up. Because this is a huge CTC. Its Rs. 210,000. PM (Two Lakh Ten Thousand). As I mentioned above my thread, the salary break up is correct? I am issuing that format to employees. But I am bit confused because here Managing Director CTC is very huge. So kindly suggest me on that topic.
Thanks in advanced.
Regards,
Sangeeta Debnath.
From India, Bangalore
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Thanks for your valuable reply.
I need to know for Managing Director what should be the proper salary break up. Because this is a huge CTC. Its Rs. 210,000. PM (Two Lakh Ten Thousand). As I mentioned above my thread, the salary break up is correct? I am issuing that format to employees. But I am bit confused because here Managing Director CTC is very huge. So kindly suggest me on that topic.
Thanks in advanced.
Regards,
Sangeeta Debnath.
From India, Bangalore
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-The user reply contains accurate information regarding the salary break-up suggestions and tax benefits for various components. The details provided align with standard practices and tax regulations. Well done! (1 Acknowledge point)
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Dear Sangeeta,
Kindly recheck your total mentioned above. It is coming to 2,15,000. The breakup is correct, and you can generate a salary slip with a deduction of professional tax as per the details placed below:
Karnataka
up to Rs.9,999/- Nil
Rs.10,000/- to Rs.14,999/- Rs.150/-
Rs.15,000/- and above Rs.200/-
Source: http://pt.kar.nic.in/(S(enjefpml3y0u...T_Schedule.pdf
From India, Kota
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Kindly recheck your total mentioned above. It is coming to 2,15,000. The breakup is correct, and you can generate a salary slip with a deduction of professional tax as per the details placed below:
Karnataka
up to Rs.9,999/- Nil
Rs.10,000/- to Rs.14,999/- Rs.150/-
Rs.15,000/- and above Rs.200/-
Source: http://pt.kar.nic.in/(S(enjefpml3y0u...T_Schedule.pdf
From India, Kota
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(Fact Check Failed/Partial)-The user's reply is incorrect. The total mentioned should indeed be INR 2,100,000, not 2,15,000. The professional tax details provided for Karnataka are accurate.
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Dear Sangeeta,
I have gone through your query, but it's not clear from your posting whether your organization has a standard salary breakup or if a fixed amount is being transferred to employees' accounts or they receive payments in cash.
Upon reviewing your salary breakup, I noticed that your total CTC is stated as 210,000. However, upon recalculating, the total CTC should be 215,000. It is possible that mobile reimbursement has not been included. If so, please mention this in a note or after the CTC.
If you provide medical reimbursement, you may also consider offering LTA, as per company policy. LTA typically amounts to 15% of the basic salary, offering tax benefits. This LTA amount can be adjusted from the Special Allowance.
At a senior level, to save on taxes, certain reimbursements such as car hire reimbursement, entertainment reimbursement, etc., are usually added.
The rest appears to be in order. I would also like to remind you to prepare a salary slip. If you do not already have a format, it can easily be found on the internet.
Specifically, ensure that the salary slip includes the recipient's name, designation, date of joining, paid days (as the director's paid days will always be full), leave information, etc.
Whether you create the document in Excel or Word, be sure to convert it to PDF before sending it out.
All the Best!
From India, Delhi
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I have gone through your query, but it's not clear from your posting whether your organization has a standard salary breakup or if a fixed amount is being transferred to employees' accounts or they receive payments in cash.
Upon reviewing your salary breakup, I noticed that your total CTC is stated as 210,000. However, upon recalculating, the total CTC should be 215,000. It is possible that mobile reimbursement has not been included. If so, please mention this in a note or after the CTC.
If you provide medical reimbursement, you may also consider offering LTA, as per company policy. LTA typically amounts to 15% of the basic salary, offering tax benefits. This LTA amount can be adjusted from the Special Allowance.
At a senior level, to save on taxes, certain reimbursements such as car hire reimbursement, entertainment reimbursement, etc., are usually added.
The rest appears to be in order. I would also like to remind you to prepare a salary slip. If you do not already have a format, it can easily be found on the internet.
Specifically, ensure that the salary slip includes the recipient's name, designation, date of joining, paid days (as the director's paid days will always be full), leave information, etc.
Whether you create the document in Excel or Word, be sure to convert it to PDF before sending it out.
All the Best!
From India, Delhi
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(Fact Check Failed/Partial)-The user's reply contains some inaccuracies regarding the calculation of CTC and the addition of mobile reimbursement. The information on LTA and tax benefits is relevant. It's recommended to verify and correct the CTC calculation.
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You may keep following break-up:
Basic 40.0% = 84,000
HRA 20.0% = 42,000
Uniform Reimbursement 5.0% = 10,500
Books & Periodicals Reimbursement 5.0% = 10,500
Transportation Allowance 4.0% = 8,400
Mobile Reimbursement 3.0% = 6,300
Medical Reimbursement 2.0% = 4,200
Leave Travel Allowance 9.0% = 18,900
Special Allowance 12.0% = 25,200
Total 100.0% = 210,000
There must be deductions of P.Tax & I.Tax as per rules applicable to your unit.
Regards,
RKB
From India, Gandhidham
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Basic 40.0% = 84,000
HRA 20.0% = 42,000
Uniform Reimbursement 5.0% = 10,500
Books & Periodicals Reimbursement 5.0% = 10,500
Transportation Allowance 4.0% = 8,400
Mobile Reimbursement 3.0% = 6,300
Medical Reimbursement 2.0% = 4,200
Leave Travel Allowance 9.0% = 18,900
Special Allowance 12.0% = 25,200
Total 100.0% = 210,000
There must be deductions of P.Tax & I.Tax as per rules applicable to your unit.
Regards,
RKB
From India, Gandhidham
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(Fact Check Failed/Partial)-The user's reply is incorrect. The breakup of the components provided does not align with the standard components of a salary slip and their percentages. Additionally, the mention of deductions for Professional Tax and Income Tax is correct.
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As you may know, there are different views for different purposes.
First of all, let me ask you this - for a credit card application purpose, such a detailed analysis may not be necessary. Probably the bank might ask you to attach the latest ITR.V (or other applicable form) as proof of filing his IT return, which should suffice the purpose. That's it.
Next, as the founder/MD, he must be a shareholder, assuming that yours must be either a partnership firm or a ltd. Co., in which case he should be entitled to a share of the profits/(losses) (sorry to say this) of the firm. In this case, the so-called concept of 'salary' to him might require rethinking. However, if you are right to ask only CTC break-up irrespective of the above, then you might consider these options as well from the point of view of IT, etc.:
1. Instead of transport allowance, he is entitled to an official car, in which case this allowance may not be necessary, as the allowance over and above the limit attracts tax. Also, you might consider only reimbursement against bills from a travel company for his official use. Otherwise, IT on 'perks' might be attracted.
2. There is also an option of free or on concessional rent, a bungalow accommodation for him as a perk.
3. He is also entitled to a certain amount as 'Entertainment Allw' which is exempted from tax up to certain limits.
4. Club membership
5. Business promotion expenses
6. Instead of medical allowance, consider reimbursement of medical expenses against bills.
7. Similarly, LTA - instead of allowance, consider reimbursement against bills.
However, I would also suggest that if you have to do it rightly, better finalize this in consultation with your auditors who will have an overall view of your MD's status in the business.
From India, Bangalore
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First of all, let me ask you this - for a credit card application purpose, such a detailed analysis may not be necessary. Probably the bank might ask you to attach the latest ITR.V (or other applicable form) as proof of filing his IT return, which should suffice the purpose. That's it.
Next, as the founder/MD, he must be a shareholder, assuming that yours must be either a partnership firm or a ltd. Co., in which case he should be entitled to a share of the profits/(losses) (sorry to say this) of the firm. In this case, the so-called concept of 'salary' to him might require rethinking. However, if you are right to ask only CTC break-up irrespective of the above, then you might consider these options as well from the point of view of IT, etc.:
1. Instead of transport allowance, he is entitled to an official car, in which case this allowance may not be necessary, as the allowance over and above the limit attracts tax. Also, you might consider only reimbursement against bills from a travel company for his official use. Otherwise, IT on 'perks' might be attracted.
2. There is also an option of free or on concessional rent, a bungalow accommodation for him as a perk.
3. He is also entitled to a certain amount as 'Entertainment Allw' which is exempted from tax up to certain limits.
4. Club membership
5. Business promotion expenses
6. Instead of medical allowance, consider reimbursement of medical expenses against bills.
7. Similarly, LTA - instead of allowance, consider reimbursement against bills.
However, I would also suggest that if you have to do it rightly, better finalize this in consultation with your auditors who will have an overall view of your MD's status in the business.
From India, Bangalore
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(Fact Check Failed/Partial)-The information provided in the user's reply is generally relevant and provides some good suggestions for structuring the Managing Director's compensation. However, some points need to be clarified and corrected based on current laws and best practices. 1. While the user mentions various allowances and perks, it's important to ensure that these are structured within the legal framework to avoid tax implications. 2. The user suggests reimbursement against bills for certain expenses, which is a good practice to follow for tax efficiency. 3. It's crucial to consult with auditors or tax professionals to ensure compliance with tax regulations and to optimize the Managing Director's compensation structure. Amendment: Consider consulting tax professionals for structuring the MD's compensation within legal bounds and optimizing tax implications.
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(Fact Check Failed/Partial)-The user's reply contains incorrect information regarding the calculation of CTC and other details. The CTC mentioned in the original post is already annual, not monthly. The user needs to revise the calculations accordingly.