Shilpa Shinde Started The Discussion:
Hi every one I want to know how we calculate basic salary? is there any unique formula to calculate basic and other component of salary details like HRA,PF,Bonus,Graduity,ESIC/medical
Certain company follow certain rules.
Like for eg: If salary is Rs. 10000 /- per month
Some calculated Basic as 10000 * 60%
some do 10000 * 40%
Some do 10000 * 20%
Depending upon the company
CTC is a wider term. It includes everything a emlpoyee get by the employer. It is what you want to add. Like some compay add Mobile bill also in ctc.
So Depends on compay to company
Here is the basic formula to calculate Salary Components of CTC
Basic – 40 to 60% of the CTC
HRA – 25 to 40% of Basic
PF – 12% of Basic as per the provident fund act both employer & employee
Bonus – 8.33% of Basic – Max 20% under the payment of Bonus Act,1965
Gratuity - (Basic +D.A) * 15 days / 26 days X 6 years (90 days) - Annually
ESIC - Employers contributes 4.75% & employee - 1.75%
Medical – Rs. 1250/- Tax Exempt - Bills to be submitted
Conveyance – Rs. 800/- Tax Exempt
I hope this will solve your query.
Salary Structure also depend upon on Zonal Area
Like Under Shop Act, there are three Zones
Zone I - Under Corporation Area
Zone II - PCMC Area and Outskirts of City area
Zone III - Village Area
There are three class of Employee in each Zone
Following is calculation of PF - ESIC -
Provident Fund Calculation = Employee with Employer Contribution
Employee Contribution - 12%
Employer Contribution - 13.61%
Description of Employer Contribution
PF Account - 3.67%
Pension Fund - 8.33% (Earlier known as Family Pension)
Administrative Charges - 1.10%
EDLI - 0.50%
Administrative Charges On EDLI Calculation - 0.01%
ESIC Calculation - Employee with Employer Contribution
Employee Contribution - 1.75%
Employer Contribution - 4.75%
basic salary is basic salary nothing else
but if u want salary
for the PF calculation salary means sum of three item(basic salary+DA under agreement+ commission on sale(fixed) .
for ESI Calculation all Except travel allowance or like this
employer contribution is 4.75 %
employee contribution is 1.75 %
and one more thing a person salary is more then 10k per month which is not in ESI
In the present to keep the liability of the Company low and increase the Take Home salary of executives the basic is kept 30 to 35% of CTC. Other allowances can be named as Flexiallowance which include HRA, Medical & Conveyance etc. The employee may be given the option to divide the flexiallowance as per his/her convenience so that he gets the maximum benefit. Statutory liabilities like PF & ESI to be also taken into consideration which is
PF - 24% of basic ( both employer & employee share)
ESI- 6.5 % ( both employer & employee share) if applicable
To save on taxes for highly paid executives superannuation scheme with LIC can be implemented.
In addition to this LTA is given. The idea behind all this is to pass the maximum financial benefit to the employee.
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