Dear Sir, I am a finance executive in a private company. Could you please suggest the best and easy structure for salary of employees? Regards, Manjeet Singh
From India
From India
There are some principles in structuring salary.
1. The salary should be less than the one notified as statutory or what is called minimum wages.
2. If the salary is as per minimum wages notified, ensure that it changes according to changes in consumer price indices. Therefore, it should be adjustable according to changes in CPI.
3. The basic objectives of salary hike, ie, to reward the employee for his performance and compensate the cost of living, should be adhered. These two objectives should be reflected in basic salary and dearness allowance respectively. Therefore, the practice of many private establishments that increase will be reflected only in "other allowance" portion/ component of salary will lead to problems in future.
4. Other than the Basic pay and Dearness allowance, any amount that you pay to your employee as demanded by the employee or according to the market requirements, elasticity of labour etc, shall be put in components linked to performance/ skill.
5. For salaries attracting income tax, it is advisable to have a few components like house rent allowance, conveyance allowance, education allowance, telephone allowance etc as 'reimbursements' rather than simply an allowance. An allowance is taxable but reimbursement is not taxable.
From India, Kannur
42501. The salary should be less than the one notified as statutory or what is called minimum wages.
2. If the salary is as per minimum wages notified, ensure that it changes according to changes in consumer price indices. Therefore, it should be adjustable according to changes in CPI.
3. The basic objectives of salary hike, ie, to reward the employee for his performance and compensate the cost of living, should be adhered. These two objectives should be reflected in basic salary and dearness allowance respectively. Therefore, the practice of many private establishments that increase will be reflected only in "other allowance" portion/ component of salary will lead to problems in future.
4. Other than the Basic pay and Dearness allowance, any amount that you pay to your employee as demanded by the employee or according to the market requirements, elasticity of labour etc, shall be put in components linked to performance/ skill.
5. For salaries attracting income tax, it is advisable to have a few components like house rent allowance, conveyance allowance, education allowance, telephone allowance etc as 'reimbursements' rather than simply an allowance. An allowance is taxable but reimbursement is not taxable.
From India, Kannur
For TDS related matter in case of salary structure everything will be taxable whether paid through salary or reimbursement if the amount is enjoyed by the employee and not used for official purpose.
As on date there are two methods of TDS calculation. In new method there is no exemption but in old method there is exemption for LTA, HRA, DOM.MED etc. For HRA there are 3 test and which ever is less will be allowed as exemption. I know one case where the organization was reimbursing car/conveyance related cost in totality. ITAX authority categorically objected and advised to maintain log book showing the actual run for official purpose and actual usage for personal purpose. For personal purpose entire amount will be taxable.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
As on date there are two methods of TDS calculation. In new method there is no exemption but in old method there is exemption for LTA, HRA, DOM.MED etc. For HRA there are 3 test and which ever is less will be allowed as exemption. I know one case where the organization was reimbursing car/conveyance related cost in totality. ITAX authority categorically objected and advised to maintain log book showing the actual run for official purpose and actual usage for personal purpose. For personal purpose entire amount will be taxable.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
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Designation & Salary Structures.doc