Greetings! Hello everyone!
Could anyone please let me know what should be the wage structure of a company? Like, what should be the basic pay of an employee and which amount of HRA should be calculated on Gross Salary or on Basic salary.
Please let me know in brief how a company should pay the salary of its employees.
From India, New Delhi
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2Could anyone please let me know what should be the wage structure of a company? Like, what should be the basic pay of an employee and which amount of HRA should be calculated on Gross Salary or on Basic salary.
Please let me know in brief how a company should pay the salary of its employees.
From India, New Delhi
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Hi!
I am working in Greater Noida in a Manufacturing Company.
First, you need to prepare a grading or level of employee. Generally, in every company, there are two types of employees:
1. Those getting minimum wages.
2. Those earning more than minimum wages, or in supervisory or managerial roles.
For employees earning minimum wages, you need to set the basic salary not less than the minimum wages.
For supervisory and managerial levels, you should create salary slabs according to the grading. Though there is no specific rule, as per the new wage code rule and a Supreme Court judgment in an EPF-related case, it is assumed that the basic salary should be at least 50% of CTC.
It is considered a good practice to establish the grading first and then determine the basic salary, HRA (40-50% in non-metro areas, 50-60% in metro cities), Gross, and CTC.
Regards,
Jagdish Kandpal
From India, Greater Noida
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I am working in Greater Noida in a Manufacturing Company.
First, you need to prepare a grading or level of employee. Generally, in every company, there are two types of employees:
1. Those getting minimum wages.
2. Those earning more than minimum wages, or in supervisory or managerial roles.
For employees earning minimum wages, you need to set the basic salary not less than the minimum wages.
For supervisory and managerial levels, you should create salary slabs according to the grading. Though there is no specific rule, as per the new wage code rule and a Supreme Court judgment in an EPF-related case, it is assumed that the basic salary should be at least 50% of CTC.
It is considered a good practice to establish the grading first and then determine the basic salary, HRA (40-50% in non-metro areas, 50-60% in metro cities), Gross, and CTC.
Regards,
Jagdish Kandpal
From India, Greater Noida
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Hello, HRA should be calculation on Basic salary not on gross. Thank you, Asha S K
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WHAT IS THE BASIS FOR SAYING THAT IN CASE ONE IS DRAWING MINIMUM WAGES THEN BASIC HAS TO BE EQUAL TO MINIMUM WAGES?
From India, Noida
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From India, Noida
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HRA is drawn as a % of of the basic pay. Govt. of India has fixed HRA for all the places, it can be used as a guideline.
From India, Mumbai
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From India, Mumbai
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The minimum wages notified by the government have two components: the Basic Pay and DA. The notified minimum wages amount has to be paid according to the skill level of the employee. An employer can vary the Basic Pay and DA amount as long as the total notified amount is paid.
From India, Mumbai
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From India, Mumbai
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There is no law to say that HRA should be paid on Basic or Monthly gross and what should be the percentage. As per ITAX, there is a rebate for HRA, and the calculation is linked to the percentage of Basic and DA. As per the definition of wages under the Minimum Wages Act, it is Basic, DA, and HRA.
But all States and the Central Govt. publish Minimum Wages only for Basic and DA. Moreover, there are States where the State House Rent Allowance Act (e.g., WB, Maharashtra, etc.) specifies the minimum HRA to be paid at 5% of Basic and DA.
Considering all the above and prevailing practices, the majority of organizations are following HRA as a percentage of Basic. I have come across organizations where HRA is a percentage of CTC.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in
From India, New Delhi
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But all States and the Central Govt. publish Minimum Wages only for Basic and DA. Moreover, there are States where the State House Rent Allowance Act (e.g., WB, Maharashtra, etc.) specifies the minimum HRA to be paid at 5% of Basic and DA.
Considering all the above and prevailing practices, the majority of organizations are following HRA as a percentage of Basic. I have come across organizations where HRA is a percentage of CTC.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in
From India, New Delhi
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Hello NIVI2015,
First things first, HRA or House Rent Allowance is typically determined by an employee’s salary.
According to the income tax regulations, the tax-exempt part of the House Rent Allowance) is the a minimum of these amounts: Actual HRA component of salary, 50 percent of basic salary if she or he resides in Delhi, Chennai, Kolkata, or Mumbai; 40 percent if he or she resides in any other state.
If you are preparing a salary structure, you should surely check this blog. It will help you get a clear understanding of salary structure and all terminologies related to it.
Hope this answer helps you!
From India, Noida
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First things first, HRA or House Rent Allowance is typically determined by an employee’s salary.
According to the income tax regulations, the tax-exempt part of the House Rent Allowance) is the a minimum of these amounts: Actual HRA component of salary, 50 percent of basic salary if she or he resides in Delhi, Chennai, Kolkata, or Mumbai; 40 percent if he or she resides in any other state.
If you are preparing a salary structure, you should surely check this blog. It will help you get a clear understanding of salary structure and all terminologies related to it.
Hope this answer helps you!
From India, Noida
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