Dear All Request you all to please share New CTC Break up/Xls post-New social Security Code 2020 being implemented by Government from April 2021.
Kindly consider 2-3 examples for easy understanding to all. Thanks & Regards
From India, Mumbai
55Kindly consider 2-3 examples for easy understanding to all. Thanks & Regards
From India, Mumbai
Dear Prasad,
Sec.2(y) of the Code on Wages, 2019 defines the term wages by inclusion and exclusion of certain common components of the wage structure. It further stipulates that whenever the sum of excluded components increases by over and above 50% of the monthly gross wages, that excess amount would be adjusted against the short fall in the sum total of the included components viz., Basic, D.A and Retaining Allowance.
Since this restriction acts as a preventive measure against the exploitative tendency of some employers to reduce their indirect financial commitments, you have to devise your CTC structure in such a manner that the sum of basic pay and D.A does not fall below 50% of the gross monthly salary.
From India, Salem
Sec.2(y) of the Code on Wages, 2019 defines the term wages by inclusion and exclusion of certain common components of the wage structure. It further stipulates that whenever the sum of excluded components increases by over and above 50% of the monthly gross wages, that excess amount would be adjusted against the short fall in the sum total of the included components viz., Basic, D.A and Retaining Allowance.
Since this restriction acts as a preventive measure against the exploitative tendency of some employers to reduce their indirect financial commitments, you have to devise your CTC structure in such a manner that the sum of basic pay and D.A does not fall below 50% of the gross monthly salary.
From India, Salem
Explanation on Wages Definition
There are 3 important steps in the definition of wages -
1. Wages means all remuneration by way of salaries, allowances or otherwise & includes Basic Pay, Dearness Allowance & Retaining Allowance if any.
2. Exclusion List –
(i) Statutory Bonus,
(ii) Value of any house accommodation or the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of the wages.
(iii) Any contribution paid by the employer to any pension or provident fund,
(iv) Any conveyance allowance or the value of any travel concession (LTA, LTC etc.),
(v) Any sum paid to the employed person to defray special expenses entitled on him by the nature of his employment,
(vi) House Rent Allowance,
(vii) Remuneration payable any award or settlement between the parties or an order of a court or tribunal,
(viii) Overtime,
(ix) Commission Payable to the employee
3. If the payment made by the employer to the employee as per exclusion list exceeds 50% of the all remuneration (CTC) calculated under this clause, the amount which exceeds 50% shall be deemed as remuneration & shall be accordingly added in wages.
As the exclusion list is exhaustive & if any employer is interested to pay to any other pocket other than exclusion list (e.g. CCA, any kind of Incentive, Leave Encashment, Insurance etc. as a part of CTC) may or may not be considered as a part of the wages.( Not properly explained under wage code )
To determine the wage structure for any employee let us consider the following examples :
Option - 1
Monthly CTC : 20000/-
Basic : 10000/-,
Employer PF : 1200/-,
Bonus : 833/- (Considering Minimum Wages is 10000/- @ 8.33% level).
Therefore, the other allowances will be (10000-1200-833) = Rs. 7967/- (Appx. 40% of 20000/-).
Hence, the Monthly Gross salary will be (10000+7967) = 17967/-
Therefore, as it appears that basic is becoming 60% appx. & other allowances are 40% at the monthly gross level
This % will again be changed ( more Basic % ) due effect of OT, LTA, Higher % of Bonus etc..
Option – 2:
Monthly CTC : 41667/-
Basic : 20833/-,
Employer PF : 2500/-,(Paid 12% of entire Basic)
Bonus : 833/- (Considering Minimum Wages is 10000/- @ 8.33% level).
Therefore, the other allowances will be (20833-2500-833) = Rs. 17500/- (Appx. 42% of 41667/-).
Hence, the Monthly Gross salary will be (20833+17500) = 38333/-
The equation will again be changed if there is LTA or other payments.
Option - 3
Monthly CTC : 41667/-
Basic : 20833/-,
Employer PF : 1800/- (PF Basic restricted to 15000/-),
Bonus : 833/- (Considering Minimum Wages is 10000/- @ 8.33% level).
Therefore, the other allowances will be (20833-1800-833) = Rs. 18200/- (Appx. 43% of 41667/-).
Hence, the Monthly Gross salary will be (20833+18200) = 39033/-
In all the cases, if we consider higher percentage of bonus & overtime, it will be safe side to make Basic 65% to 70% of the monthly gross salary & 35% to 30% is the other allowances within the exhaustive list of exclusion ( HRA, Conv. etc.)
S K Bandyopadhyay ( Howrah,WB)
From India, New Delhi
There are 3 important steps in the definition of wages -
1. Wages means all remuneration by way of salaries, allowances or otherwise & includes Basic Pay, Dearness Allowance & Retaining Allowance if any.
2. Exclusion List –
(i) Statutory Bonus,
(ii) Value of any house accommodation or the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of the wages.
(iii) Any contribution paid by the employer to any pension or provident fund,
(iv) Any conveyance allowance or the value of any travel concession (LTA, LTC etc.),
(v) Any sum paid to the employed person to defray special expenses entitled on him by the nature of his employment,
(vi) House Rent Allowance,
(vii) Remuneration payable any award or settlement between the parties or an order of a court or tribunal,
(viii) Overtime,
(ix) Commission Payable to the employee
3. If the payment made by the employer to the employee as per exclusion list exceeds 50% of the all remuneration (CTC) calculated under this clause, the amount which exceeds 50% shall be deemed as remuneration & shall be accordingly added in wages.
As the exclusion list is exhaustive & if any employer is interested to pay to any other pocket other than exclusion list (e.g. CCA, any kind of Incentive, Leave Encashment, Insurance etc. as a part of CTC) may or may not be considered as a part of the wages.( Not properly explained under wage code )
To determine the wage structure for any employee let us consider the following examples :
Option - 1
Monthly CTC : 20000/-
Basic : 10000/-,
Employer PF : 1200/-,
Bonus : 833/- (Considering Minimum Wages is 10000/- @ 8.33% level).
Therefore, the other allowances will be (10000-1200-833) = Rs. 7967/- (Appx. 40% of 20000/-).
Hence, the Monthly Gross salary will be (10000+7967) = 17967/-
Therefore, as it appears that basic is becoming 60% appx. & other allowances are 40% at the monthly gross level
This % will again be changed ( more Basic % ) due effect of OT, LTA, Higher % of Bonus etc..
Option – 2:
Monthly CTC : 41667/-
Basic : 20833/-,
Employer PF : 2500/-,(Paid 12% of entire Basic)
Bonus : 833/- (Considering Minimum Wages is 10000/- @ 8.33% level).
Therefore, the other allowances will be (20833-2500-833) = Rs. 17500/- (Appx. 42% of 41667/-).
Hence, the Monthly Gross salary will be (20833+17500) = 38333/-
The equation will again be changed if there is LTA or other payments.
Option - 3
Monthly CTC : 41667/-
Basic : 20833/-,
Employer PF : 1800/- (PF Basic restricted to 15000/-),
Bonus : 833/- (Considering Minimum Wages is 10000/- @ 8.33% level).
Therefore, the other allowances will be (20833-1800-833) = Rs. 18200/- (Appx. 43% of 41667/-).
Hence, the Monthly Gross salary will be (20833+18200) = 39033/-
In all the cases, if we consider higher percentage of bonus & overtime, it will be safe side to make Basic 65% to 70% of the monthly gross salary & 35% to 30% is the other allowances within the exhaustive list of exclusion ( HRA, Conv. etc.)
S K Bandyopadhyay ( Howrah,WB)
From India, New Delhi
Hello, we are giving monthly remuneration as below to one of our employees:
Basis : 14,000
HRA : 7,000
Conveyance : 1,600
Special allowance : 14,400
Total : 37,000 per month
Employer PF : 1,800 monthly
We also have annual payments as below :
Annual allowance LTA/Medical : 20,000
Bonus : 12,600
Performance payment : Varies but is about 40,000
Leave encashment : Various but is about 30,000
We also put money in Gratuity account every year as per calculations based on increased basic
In this case how do we have to restructure the wages as per the new codes, keeping the same annual CTC?
From India, Aurangabad
Basis : 14,000
HRA : 7,000
Conveyance : 1,600
Special allowance : 14,400
Total : 37,000 per month
Employer PF : 1,800 monthly
We also have annual payments as below :
Annual allowance LTA/Medical : 20,000
Bonus : 12,600
Performance payment : Varies but is about 40,000
Leave encashment : Various but is about 30,000
We also put money in Gratuity account every year as per calculations based on increased basic
In this case how do we have to restructure the wages as per the new codes, keeping the same annual CTC?
From India, Aurangabad
@HBJ
the wages calculation is from line 2 to 5 and gross wages is mentioned in line 6 by you as 37000/-
Now the employer has to merge the special allowance (Line5) to basic and HRA to the extent that BASIC(Line 2) should not be lower than 18500/- (50% of 37000) in any case, if the employer is maintaining cap of 15000 EPF ( looks from the calculation) that would not get effected,
balance after Line 6 are annual payouts and does not get classified under wages
CTC and monthly wages both are total different terms and new code is applicable on wages, CTC is the employer's terminology
the wages calculation is from line 2 to 5 and gross wages is mentioned in line 6 by you as 37000/-
Now the employer has to merge the special allowance (Line5) to basic and HRA to the extent that BASIC(Line 2) should not be lower than 18500/- (50% of 37000) in any case, if the employer is maintaining cap of 15000 EPF ( looks from the calculation) that would not get effected,
balance after Line 6 are annual payouts and does not get classified under wages
CTC and monthly wages both are total different terms and new code is applicable on wages, CTC is the employer's terminology
Bifurcation of gross monthly wages shall be in the ratio of 50:50 in respect of the sum of basic pay plus dearness allowance vis-a-vis the sum of all other monthly allowances as per the definition of the term ' Wages' u/s 2(y) of the Code on Wages,2019 which will come into force w.e.f 01-04-2021. It applies to all employees without any distinction of their cadre. If the ratio is disturbed on account of reasons like application of CTC concept to salary structure resulting in the reduction of the ratio of the basic component, there would be automatic restoration of the statutory ratio for the statutory computation of contribution towards EPF, ESi, Gratuity, Bonus, Retrenchment Compensation etc.
Better restructure your CTC accordingly without violating the minimum wages,if any in force.
From India, Salem
Better restructure your CTC accordingly without violating the minimum wages,if any in force.
From India, Salem
@HBJ
jugglery of numbers can not hide the facts,
viz at 14400/- basic the employer pays 1800/- EPF (Line no 7), as per your post ............. and to reach this amount the basic must be 15000/-
it is unfortunate in india that lower and middle grade pay scale employees suffer the most, while the upper class enjoy the lavish perks
at lower levels we should ask the employer to have a lenient view to make compliance above ceiling, specially where the gross wages are below 15k,
and yes the Gratuity part would cost a little bit more, but the employer may opt for installments,
jugglery of numbers can not hide the facts,
viz at 14400/- basic the employer pays 1800/- EPF (Line no 7), as per your post ............. and to reach this amount the basic must be 15000/-
it is unfortunate in india that lower and middle grade pay scale employees suffer the most, while the upper class enjoy the lavish perks
at lower levels we should ask the employer to have a lenient view to make compliance above ceiling, specially where the gross wages are below 15k,
and yes the Gratuity part would cost a little bit more, but the employer may opt for installments,
Dear Mr. Umakanthan and @Glidor. Thank you for the replies. We are paying more than the minimum wages to everyone and also abiding by all the rules laid down. We also give increase every year. However sudden changes in rules such as these increase the cost without sometimes realizing it. For example, the employee with basic of 14,400 my have got an increase of 1,200 or so in basic salary normally but if we have to increase basic by Rs.4,000 per month, the amount of gratuity compensation increase tremendously for someone with 20 years service. The gratuity for 20 years with say 15,600 salary would be around 1,80,000 and for 18,500 it would be 2,13,500. So the increase in gratuity contribution itself would be more than the regular annual increment. Are my calculations correct or am I making a mistake? Is there any ceiling of basic salary while calculating gratuity, like there is a ceiling of 15,000 for PF calculation?
From India, Aurangabad
From India, Aurangabad
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CTC-Salary Break Up.pdf
CTC Break up.xls