B NLeelavathi Started The Discussion:
Hi I have to design and develop Salary structure..for 5 to 6 positions for my project... it should contain the basic components of salary structure... Equitable compensation theory model !can somebody help me?

Hi B Neelavathi,


The Salary structure varies company to company based on their C & B policies. Some of the common Pay heads used are

1) Basic - 35% - 50% of Gross
2) HRA - 40% of Basic for Non metro & 50% of basic for Metro
3) Con - Max Rs. 800/ P M which is Max of Rs. 9600 P A
4) Medical Reim - Max Rs. 1250 / PM which can be max of Rs 15000 PA
5) Spl Allow - Balance of Gross will be provided as Spl Allow

1) PF
Emp Contribution - 12% on Basic
Emp'r Contribution - 13.61% on basic

2) ESI - Applicable to employees whose Gross Salary is less than or equal to Rs.10000
Emp Contribution - 1.75% on Grorss
Emp'r Contribution - 4.75% on Gross

PT - It Varies State to state

Net Salary = Gross - PF (Emp Cont) - ESI (Emp Cont) - PT
CTC = Gross + PF (Emp'r Cont) - ESI (Emp'r Cont)

Gratuity = Basic *15/26 - It is payable to the employee who completes 5yrs of service in the organisation. It can be showed as a part of CTC.

If Employees coming under high Salary Then you can again split up the amount in Spl Allow As

1) Food coupons
2) Car Hire
3) Petrol and Maint for Car
4) LTA

FBT is applicable Apart from LTA.

The Variable Pay % also differs company to company based on the C & B Policy. In my previous organization it is 12.5% of the CTC for all the Dept except Sales. For sales it will be 15%.

M V Muthu Krishnan
99622 98084
Hi Muthu,

This is Lakshmi and I am joining a IT Firm which is opening its branch in Bangalore. In US its already established. I have to go ahead and design the salary structure for the employees in such a way that Tax deductions is less. I am new to C & B topic.
Can you help me on the components to be concentrated on..
Also, is there a standard excel salary break up sheet?

I will be really thankful if you can help me out in designing the structure.


I hope my previous post not satisfied your question... Which is your current industry? Have you already done the grading of employees? Are you ready with all department organisation charts? Because these are the basic elements in C&B.

Hi Lakshmi,

Sorry for the delay in replying...

Have you got the answer or still require some?

If you tell me what are the components you are using in your pay structure? If I get an idea then I will help you on tax Deduction..


M V Muthu Krishnan
99622 98084

Hi Muthu,

Not a problem. Our company is taking the help of VnV associates for designing the ctc break up structure.
We have the following slabs:
0-5 lacs; 5-10 lacs; 10-15 lacs and 15+ lacs..
As we started the operations only in month of feb, we have considered them as consultants and from april 1st, shall consider them as permanent employees.
Kindly give me an idea of what can be different perquisites that can be provided to the employees.


In addition to Muthu's break up of salary for the highly salaried people, the following components can be considered.
1. Children Edu. Allownce - Rs.200/- p.m (Rs.100 per child)
2. Children Hostel Allowance - Rs.300/- pm per child
3. Club Allowance
4. Superannuation - 15% of basic.

The above are tax exempted.
Dear All, Please note that the ceiling for deducting ESI is raised to 15,000/- by governement of india with effect from July 2010. Kindly deduct accordingly and update the systems.
Muthkrish Sir,

I had a confusion that PF is equal for employers & employees i.e. 12% but while calculating the salary structure, you had mentioned like
1) PF
Emp Contribution - 12% on Basic
Emp'r Contribution - 13.61% on basic

How this would be 13.61% ? 12% is ok but what about 1.61% ?


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