Salary Structure - Xls Download [thread 20225] - CiteHR
Akm18
Senior Manager (legal & Administration)-cum-
Sapana
Housewife
Neelam7909
Hr Professional
Fresherz
Consultant
Shalini_chd
Working Women

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hi all
as i am a fresher and doing mba in hr specialization so i bit confused of disigning a salary structure......can any body please explain me the various components of a general salary structure so when i sat for the interview and any body offers me a job ,i am very much clear about each and every components of salary and don't get confused
if its possible please mail information to
seema

Ask your parents if they are working with govt sector , tell them get their salary slip or better way is try to accompany with to their office and meet the accounts & h.r dept person and clarify your doubts
Salary and a Model salary structure for a Company

Salary for the purposes of Income tax Act is defined to include:

• Wages

• Any annuity or pension

• Any gratuity

• Any fees, compensation, perquisites or profits in lieu of or in addition to any salary or wages

• Any advance of salary

• Any payment received by an employee in respect of any period or leave not availed of

• The annual accretion to the balance at the credit of an employee participating in a recognized provident fund, to the extent to which it is chargeable to tax

• The aggregate of all sums that are comprised in the transferred balance of an employee participating in a recognized provident to the extent to which it is chargeable to tax.

Salary under the Income Tax is chargeable to tax in the following circumstances: -



 When due from the former employer or present employer in the in the previous year, whether paid or not.

 When paid or allowed in the previous year, by or behalf of a former employer or present employer, though not due or before it becomes due.

 When arrears of salary is paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates.

It is pertinent to mention that for an income to be assessable under the head Salary an employer- employee relationship is essential.

The amount of compensation decided to be paid to an employee and can be structured under different sub-heads keeping in mind the tax implications thereof.

The compensation paid to an employee can be structured under the following heads:

• Salary:

 Basic Salary: the tax treatment of the said sub-head is governed by section 15 of the Income Tax Act.

 Dearness Allowance/Pay: Dearness Allowances are the allowances/pay given to the employees to meet the cost of living increasing day –by-day and the same is fully taxable as per the provisions of section 15 of Income Tax Act.

• Allowances: are generally defined as a fixed quantity of money or other substances given regularly for the purpose of meeting some particular requirements connected with the service rendered by the employee or as a compensation for unusual conditions of that service. The said Allowances can be granted under the following sub-heads:

House Rent Allowance:

House rent allowance received by an employee is taxable under the head Salaries upto the extent it is not exempt u/s 10(13A) of the Income Tax Act. The exemption is denied where the employee lives in his own house or in a house for which he does not pay rent. Otherwise house rent allowance is exempt to the extent of minimum of the following three amounts. The minimum of the following three amounts shall be exempt from tax and the balance shall be taxable and thus included in the gross salary of the employee.

• Actual House Rent Allowance received by the employee in respect of the period during which the rented accommodation is occupied by the employee during the previous year.

• Excess of rent paid (for the accommodation) over 10% of the salary for the relevant period.

• 50% of the salary where the residential house is situated at Mumbai, Calcutta, Delhi or Chennai and 40% of the salary where the house is situated at any other place, for the relevant period.

Salary for the purpose of House rent allowance includes basic salary and dearness allowance if the terms of employment so provide. All other allowances and perquisites shall not be included for calculating the exemption limit. [However, as per Supreme Court decision, commission, if received at a fixed percentage of turnover, achieved by the employee would form part of the salary 117-ITR-1 (SC)]. This salary is to be determined only on due basis and emoluments for the period other than the previous year are not to be considered. Again emoluments of the period during which rental accommodation is not occupied in the previous year are left out of the computation.

 Specified Special Allowance: these include allowances granted to meet expenses incurred wholly and necessarily in the performance of duties of office or to compensate the employee for increased cost of living and these are exempt from tax to the extent of actual amount received or the amounts spent for the specified purpose for which these were received. Few of such allowances are :

 Traveling Allowance: any allowance to meet the cost of travel on tour, on account of transfer including packing and transportation of personal effects on such transfers and it also includes the daily charges incurred by an employee on account of absence from his normal place of duty

 Conveyance Allowance: to meet the expenditure on conveyance in the performance of the duties of an office

 Helper Allowance: any allowance to meet the expenditure on a helper where such helper is engaged for the performance of the duties of an office

 Academic Allowance: granted for encouraging academic, research and other professional pursuits.

 Uniform Allowance – to meet the expenditure on the purchase or maintenance of uniform for wear during the performance of the duties of an office

• Perquisite: is any casual emolument, fee or profit attached to an office or position in addition to the salary or wages. In other words, perquisites are the benefits in addition to the normal salary to which the employee has a right by virtue of his employment.

Tax free perquisites:

 Medical facility: Any medical facility provided by the employer to the employee and his family members in a hospital, dispensary or a nursing home maintained by the employer.

 Medical reimbursement: Any medical expenses reimbursed by the employer for the treatment of his employee and his family members in an approved Hospital subject to maximum of Rs.10, 000 per annum upto assessment year 1998-99. The limit of Rs.10, 000 has been raised to Rs.15, 000 per annum w.e.f. assessment year 1999-2000.

 Refreshments: Any refreshment provided to the employees during office hours at the place of work.

 Subsidized lunch or dinner provided by the employer: When lunch or dinner is provided at subsidized rates i.e. the employer charges some amount for the lunch or dinner then only it is tax-free perquisite.

 Recreational facilities: Any recreational facility provided to a group of employees by the employer is not taxable. These should not be restricted to only a few employees.

 Telephone Bills: Telephone bills of the telephone installed at the residence of the employee for official purposes, if paid/reimbursed by the employer, is not a taxable perquisite even if such telephone is used for official as well as personal benefit of the employee.

 Insurance: Any portion of the premia paid by an employer to effect or to keep in force an insurance on the health of the employee under an approved scheme. This covers reimbursement of the expense incurred by the employee for schemes approved under section 80D also.

 Loans to employees: If the employer gives a loan to an employee either without interest or at a concessional rate of interest for construction or purchase of a house or for a conveyance, then the benefit of interest availed of by the employee would not be taxable.

 Training of employees: Any expenditure incurred by the employer, for providing training to the employees or by way of payment of fees of refresher management courses attended by the employee, would not be taxable because these enable the employees to perform their services more efficiently. .

 Employers contribution: Employers contribution to pension, deferred annuity scheme and staff group insurance scheme of employees, is not a taxable perquisite in the hands of employees.

 Conveyance facility: provided for the journey between office and residence at a free of charge or at a conssesional rate

• Perquisites which are taxable in all cases

 Value of rent-free accommodation provided to the employee by his employer.

 Value of concession in rent in respect of accommodation provided to the employee by his employer

 Amount payable by an employer, directly or indirectly, to effect an insurance on the life of an employee or to effect a contract for annuity, other than payments made to a recognized provident fund or an approved superannuation fund or deposit-linked insurance fund established under the Coal Mines Provident fund Act or Employees Provident fund Act.

The above discussed various heads of Compensation Package can be structured as per your requirements by using any of the allowance and perquisites heads in the following format:

Heads



BASIC SALARY



Basic salary Rs._____________________

Dearness all/ pay forming part of salary Rs._____________________

Dearness all/ pay-not part of salary Rs._____________________

Advance salary Rs._____________________

Arrears of salary Rs._____________________

Incentives Rs._____________________



TOTAL Rs._____________________

ALLOWANCES

House rent allowance Rs._____________________

City compensatory allowance Rs._____________________

Duty transportation allowance Rs._____________________

Transport allowance residence-office Rs._____________________

TOTAL

Rs.______

PERQUISITES

Medical facilities Rs._____________________

Car Rs._____________________

TOTAL Rs._____________________



Profits in lieu of Salary

Any gratuity Rs._____________________



TOTAL SALARY Rs._____________________





LESS:

Standard Deduction Rs._____________________

Professions Tax paid Rs._____________________

Entertainment Allowance Rs._____________________



NET TAXABLE SALARY Rs._____________________



Rounded of to nearest Multiples of 10 Rs._____________________

Tax on Salary Rs._____________________

LESS:

Rebate under section 88 Rs._____________________

TAX PAYABLE

Rs._____________________

ADD:

Surcharge @ 10% Rs._____________________

TAX PAYABLE

Rs._____________________

Still confusion please lte me know

regards

arun k mishra

I am working as a Astt. Manager HR, i just want to know that the latest HR Poplicies/salary structure used in corporate. Shalini Singh
Hi,
I liked the way you have made us understand about salary breakups.
But i have some queries for you if possible do let me know:
1) If we have to generate a salary slip for a Pvt. Ltd. Co. what kind of breakup is required?
2) Breakup for salaries upto 7500 & 15000
3) Also let me know how the PF, ESI, & the PT is calculated with the above type of salaries.
Sapana

I am working as a Astt. Manager HR, i just want to know that the latest HR Poplicies/salary structure used in corporate.

Shalini Singh

Hi,

I liked the way you have made us understand about salary breakups.

But i have some queries for you if possible do let me know:

1) If we have to generate a salary slip for a Pvt. Ltd. Co. what kind of breakup is required?

2) Breakup for salaries upto 7500 & 15000

3) Also let me know how the PF, ESI, & the PT is calculated with the above type of salaries.

Sapana

Yearly & Monthly Break Up of Gross Salary



Basic 30%

HRA 20%

City Compensatory All. 30%

Conveyance Rs.800 per month

Special Allowance Balance





Yearly Grand Totals Monthly

Gross Salary 15,000 1,250

Basic 4,500 375

HRA 3,000 250

City Compensatory All 4,500 375

Employers Contribution 12% of basic or Rs. 780/- whichever is less 540 45

Conveyance 9,600 800

Yearly Bonus 29,988 2,499

Special Allowance (37,128) 15,000 (3,094) 1,250



Less : Deduction

P.F. ( Employees Contribution 12% of Basic or Rs 780/- whicever is less 540 45

P.F. ( Employers Contribution 12% of Basic or Rs 780/- whicever is less 540 45

Professional Tax 960 2,040 80 170

Net Salary Payable 12,960 1,080

Add Performance Bonus 0

12,960



Enter Values only in Yellow Cells



VISHAL SATISH CHOPRA



Yearly & Monthly Break Up of Gross Salary



Basic 30%

HRA 20%

City Compensatory All. 30%

Conveyance Rs.800 per month

Special Allowance Balance





Yearly Grand Totals Monthly

Gross Salary 5,000 417

Basic 1,500 125

HRA 1,000 83

City Compensatory All 1,500 125

Employers Contribution 12% of basic or Rs. 780/- whichever is less 180 15

Conveyance 9,600 800

Yearly Bonus 29,988 2,499

Special Allowance (38,768) 5,000 (3,231) 417



Less : Deduction

P.F. ( Employees Contribution 12% of Basic or Rs 780/- whicever is less 180 15

P.F. ( Employers Contribution 12% of Basic or Rs 780/- whicever is less 180 15

Professional Tax 960 1,320 80 110

Net Salary Payable 3,680 307

Add Performance Bonus 0

3,680



Enter Values only in Yellow Cells

WIN WIN SALARY STRUCTURE

It is possible for employers and employees to draw up tax-efficient, win-win compensation packages even in the FBT regime. Consider the case of an employee who was drawing Rs 7.2 lakh p.a. (cost-to-company), including reimbursements as below, in the pre-FBT regime. Companies may respond to the FBT in two ways. Salary Structure 1 below is drawn up by merging all these reimbursements into the employee's salary structure—as some employers have done. In this case, the employee's tax liability is over Rs 97,000, but the company pays no FBT on these employee-specific reimbursements. Salary Structure 2 shows the smarter way for companies to do it: by retaining these as reimbursements (and not building them into the employee's salary, which would be taxed at 33.66 per cent), and paying an FBT (in most cases 6.7 per cent). Even if this tax on the employer is passed on to the employee (by, for instance, lowering the cost-to-company package to the extent of the FBT payable on these reimbursements), the employee's tax liability is lower by about Rs 47,000 a year than in Scenario 1. And here too the employer does not effectively bear the FBT on these employee-specific reimbursements. It's a win-win strategy.

SALARY STRUCTURE 1 SALARY   STRUCTURE 2

Actual (Rs) Taxable (Rs) Actual (Rs) Taxable (Rs)

Basic 41,295 41,295 28,429 28,429

Employer's contribution to PF 4,955 - 3,411 -

Rent-free accommodation 10,500 8,259 10,500 5,686

Medical (p.a. expressed in p.m.) 1,250 - 1,250 -

LTA entitlement (p.a. expressed in p.m.) 2,000 - 2,000 -

FBT Employer's car, employer's expenses - - 3,000 -

A

P

P

L Chauffeur reimbursement - - 3,500 -

I Entertainment reimbursement - - 1,000 -

E Other reimbursements - - 3,000 -

S Books & periodicals reimbursement - - 3,000 -

Fringe benefits tax (FBT) - - 910 -

Total salary income p.m. 60,000 49,554 60,000 34,115

Gross total income 5,94,648 4,09,380

Less: Deduction u/s 80C, 80CCC & 80D 1,10,000 1,10,000

Taxable income 4,84,648 2,99,380

Tax 95,395 39,814

Add: Education cess 1,908 796

Tax payable (as TDS) 97,303 40,610

Add: FBT paid by employer - 10,920

Total tax cost to the employee 97,303 51,530a

Difference 45,773

Take-home post tax (Rs p.m.) 29,481 35,474

Take-home as a percentage of gross compensation 49.10% 59.10%

The tax structure is for a male below age 65

aAssuming that the employer pays FBT, and lowers the employee's cost-to-company (CTC) to that extent


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