Hi, I wanted to know the following important queries:
1. Is a Proprietorship company or a Pvt Ltd. company eligible to have the regular CTC structure?
2. In case the company is not registered under labor laws, then how will the salary structure be?
3. Is the deduction of TDS or PF compulsory if the company goes for the salary structure?
From India, Mumbai
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1. Is a Proprietorship company or a Pvt Ltd. company eligible to have the regular CTC structure?
2. In case the company is not registered under labor laws, then how will the salary structure be?
3. Is the deduction of TDS or PF compulsory if the company goes for the salary structure?
From India, Mumbai
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What do you mean by a salary structure? A salary structure is nothing but a system that is common for all the employees in the organization regarding the fixing and revision of remuneration. It is for convenience that we adopt a structure, and from a legal standpoint, what is important is whether the employees receive the bare minimum wages set by the government or not. You can have a consolidated salary based on skills and experience. The law does not prohibit you from such a salary pattern as long as you are paying at or above the minimum wages.
The Cost to Company (CTC) is different from the salary. In CTC, the additional sum payable to an employee by statute or agreement, which includes costs to the employer like Provident Fund, ESI, Medical Insurance, Bonus, Commission, Variable Incentives, etc., will also be added to the salary.
There is no difference between a proprietorship concern and a Pvt Ltd company regarding the application of labor laws. What is important here is the number of workers. Certain laws apply to establishments employing only 100 employees, while other laws apply to establishments employing even 10 employees. Similarly, the coverage of certain laws depends on the salary of the employees.
Tax Deducted at Source (TDS) also depends on the annual salary of each employee. Since certain elements of salary, such as HRA, medical reimbursements, travel allowance, etc., directly impact the tax liability of employees, employers often seek a salary structure that is beneficial to the employees.
From India, Kannur
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4771The Cost to Company (CTC) is different from the salary. In CTC, the additional sum payable to an employee by statute or agreement, which includes costs to the employer like Provident Fund, ESI, Medical Insurance, Bonus, Commission, Variable Incentives, etc., will also be added to the salary.
There is no difference between a proprietorship concern and a Pvt Ltd company regarding the application of labor laws. What is important here is the number of workers. Certain laws apply to establishments employing only 100 employees, while other laws apply to establishments employing even 10 employees. Similarly, the coverage of certain laws depends on the salary of the employees.
Tax Deducted at Source (TDS) also depends on the annual salary of each employee. Since certain elements of salary, such as HRA, medical reimbursements, travel allowance, etc., directly impact the tax liability of employees, employers often seek a salary structure that is beneficial to the employees.
From India, Kannur
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Dear Ankita N,
Is a proprietorship company or a private limited company eligible to have the regular CTC structure? Yes.
The salary fixation and its structure of a company do not fall under labor laws, but for any violation, the company can be prosecuted under the law. The company either has to take registration under the Shops and Commercial Establishment Act of the state if the total number of engagements is 10 or more. In that case, how will the salary structure be?
The deduction of TDS is a must, but PF is applicable if the total number of employees in your company is 20 or more.
From India, Mumbai
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Is a proprietorship company or a private limited company eligible to have the regular CTC structure? Yes.
The salary fixation and its structure of a company do not fall under labor laws, but for any violation, the company can be prosecuted under the law. The company either has to take registration under the Shops and Commercial Establishment Act of the state if the total number of engagements is 10 or more. In that case, how will the salary structure be?
The deduction of TDS is a must, but PF is applicable if the total number of employees in your company is 20 or more.
From India, Mumbai
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(Fact Check Failed/Partial)-The reply provided has some inaccuracies: 1. Both Proprietorship and Pvt Ltd. companies can have a regular CTC structure. 2. Salary structure falls under labor laws, and registration under state-specific laws is mandatory. 3. TDS deduction is compulsory, and PF is applicable if the company has 20 or more employees.
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All types of companies are required to follow labor laws. Regarding salary structure or CTC, the structure should cover all the emoluments that are mandatory by law and be at least equal to or above the specified minimum limits of wages and remittances like EPF, ESIC, MLWF, bonus, gratuity, and leave with wages, etc.
Further, it is important to follow the conditions of services specified by the law. TDS deductions are applicable under income tax law, while professional tax deductions are also applied and deducted from the salary.
CTC, therefore, includes all such emoluments that contribute towards the cost to the company. Salary comprises all amounts earned by employees by entitlement plus the deferred benefits that are deducted from the salary as contributions towards statutory remittances. Thanks to Madhu TK for explaining it so well.
From India, Vadodara
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Further, it is important to follow the conditions of services specified by the law. TDS deductions are applicable under income tax law, while professional tax deductions are also applied and deducted from the salary.
CTC, therefore, includes all such emoluments that contribute towards the cost to the company. Salary comprises all amounts earned by employees by entitlement plus the deferred benefits that are deducted from the salary as contributions towards statutory remittances. Thanks to Madhu TK for explaining it so well.
From India, Vadodara
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(Fact Check Failed/Partial)-The user's reply contains mostly accurate information regarding salary structures, statutory deductions, and CTC components. However, it's important to note that the classification of companies does impact certain labor law obligations. Additionally, the specifics of the salary structure should align with legal requirements. Professional tax deduction is not always applicable across all states. Overall, it provides a good overview with room for a few clarifications.
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(Fact Check Failed/Partial)-The user reply is not relevant to the original post which inquired about salary structures in different types of companies and the legality of deductions like TDS and PF.
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(Fact Checked)-The user's reply is mostly correct, providing accurate information on salary structure, CTC, and the application of labor laws based on the number of employees and salary levels. The response aligns with best practices and legal requirements. (1 Acknowledge point)