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Hi All,
I am just starting with a new company and trying to understand the details of the salary structures.
I want to keep the salary components to a minimum and hence wanted to know what are the least that are allowed.
Is it possible to not have a PF component and add that as a special allowance so that the employee can invest it in whichever fund he feels adequate?
I was thinking of only the following
Basic (@ 40% of CTC)
HRA (@ 40% of CTC)
Special allowance (@ 20% of CTC)
and then deduct Professional tax and Income tax from the salary.
Please let me know the least required as per indian income tax laws. Mine is a Pvt. Ltd. company.
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it is bring your attention that there are two points which to be discussed in your query.
first is PF compulsory ?yes it is compulsory to deduct if you have the 10/20 empoyees as per requirment and whose basic is less than 6500 you are bound to deduct PF.
secondly your salary bifurcation is not income tax can keep basic 40% of ctc but HRA should not be more than 50% of basic
otherwise income tax exemption will not be given if it more than 50%,next show 800 as coveyance as it is exempted from income tax,show1250
as medical reimbrusment as it also exempted.
Thanks for the suggestions.
I expect to have not more than 3-4 employees this year and everybody's salary will be around 30,000 per month which means @ 12,000 basic.
So in this situation is this structure look OK for 30,000/- p.m. salary?
Basic + DA = 12,000
Special allow = 9,750
HRA = 6,000
Conveyance = 800
Medical = 1250
Child edu. = 200
As a side note, company is into software development.
Dear VM,
PF is certain and Mandatory, if you have 10+ employees. I need to know whether you have that many numbers currently in your organization (I shall assume, you use Power in the Organization; now-a-days every organization using power, i.e., Electricity!)
Otherwise, it is not required to have EPF right now. However, whenever you increase your numbers more than 10 it is required. Even it would apply sometime in the future it drops below 10 once it got applicable to you.
Jaikumar Ranganathan
Dear Jaikumar,
I have started my company few weeks back.
I will have my first employee next month and don't expect to have more than four by end of 2010. Depends on how much business I get.
Dear Vijay
You need not to have PF code
However, PF department not only looks into employees but also contractors. Hence, if you outsource the entire work having only four employees, this is fine. Alternatively, if you would like to increase your strength by having a middle man in employment, you should contribute to PF thru the middle man, plus you should be having a code for yourself though your manpower strength is only 4.
As you said your manpower is 4 and not more than 4 by any other method, not having a PF code is perfectly fine.
Hi VM,
We are a mumbai based professional services provider, our services line is Payroll Outsourcing & PF Administration. In case your start up needs our services please do contact us on 022-67400712.
Dear This is mandatory to deduct PF as well as ESI , if an organisation is having >= 20 employees.....
we have recentely enrolled PF , Its leagally must if you have employees 20+ including the directors / prop / etc., if not this not at all applicable.
Dear All, I want to know If labour cantractor does not deposit pf contribution amount in favour of EPFO than what is the libelity of principal employer. pankaj
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