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Salary Structure - Income Tax

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?

Regards
Leela

muthkrish - Contributing Member
Hi B Neelavathi,

Hi

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

Statutory
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%.

Regards,
M V Muthu Krishnan
99622 98084

lakshmibright - Contributing Member
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.

Rgds
Lakshmi


Quote:
Originally Posted by muthkrish View Post
Hi B Neelavathi,

Hi

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

Statutory
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%.

Regards,
M V Muthu Krishnan
99622 98084

jiguparmar - Contributing Member
Please find new version of Salary Master with new Feactures..

Totally Usefriendly program.
You can enter your Company name,Address,Department,Designations
You can set Categoeries of Fixed earning-Other Earning-Fixed deduction-Other deduction in Salary Slip.
You can set limit of ESI,P.F,Income Tax Slab for Man and Woman,Surchage setting,Professional Tax.

Program is Designed on Two mode
(1) In Auto mode salary slip will be generated as per Your predefined data given in "Company Detail Sheet"
(2) In Manual mode Salary Slip will be generated as per Manual detail given by You.It will not concern with the data given by you in "Company detail sheet"
Ex: We need to generate salary for Regular Employee as per company Policy for that You may put this employees on Auto mode and it will generate Salary slip as per your predefined data (If Basic is 25% of Gross than auto calculate it)But Some Employees are Temperaroy or We don't Follow Rules as per Regular employee so that This Type of Employee Put on Manual mode and enter your Data manually(here You have manually enter Basic and other details).

Software Contains:

1-Attendance Register.
2-Payroll Register.
3-Generate Salary Slip.
4-Track Employees' Leave history.
5-Track Income Tax of All Employee.
6-Print out Leave History of Employee.
7-Overtime Monitor.
8-Master Data sheet of All Employees.
9-Leave Calculation sheet.
10-ESI Calculation(Set Your Requirements)
11-P.F Calculation
(Here there are Two Options one is if Basic<=6500 than Basic*12% otherwise 6500*12%
Second is 12% of Basic)
12-Pension Scheme (not more than 541 rs submission)
13-TDS Calculation
14-Annual Salary statement of Employee and Employer
15-Employer Monthly Salary statement
16-Income Tax Calculations
17-Generation of Form No-6 (For ESIC)
18-Generation of Form no-3A (PF)
19-Generation of Form no-6A(PF)

Limitation: You have monitor Leave of employee each month when It goes minius Red indication is glow on that cell so You have to Put it on LWP otherwise minus leave will effect on salary sllip generation.
Requied Attention: Please be vigilant about Auto and Manual mode and P.F Selection.

If You find this is useful for You than Don't miss to deop Thanks...

Download:Free File Hosting & Video Downloads, Free File Sharing, Online Friends Network - Ziddu

muthkrish - Contributing Member
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.

Quote:
Originally Posted by B NLeelavathi View Post
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?

Regards
Leela

muthkrish - Contributing Member
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..

Regards,


M V Muthu Krishnan
99622 98084

Quote:
Originally Posted by lakshmibright View Post
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.

Rgds
Lakshmi

lakshmibright - Contributing Member
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.

Thanks
lakshmi


Quote:
Originally Posted by muthkrish View Post
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..

Regards,


M V Muthu Krishnan
99622 98084

pon1965 - Senior Member
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.

muthkrish - Contributing Member
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
Statutory
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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