Devender Kr. Sharma
Asst. General Manager
Gm Hr & Admin.
I can let you know what we do in our company.
Suppose the person's salary is X
# of working days is 27 (we have this for workers) or 31 (we have this for management). You choose what ever you have in your company.
So you can use the formula:
We make all calculations based on this.
9th June 2007
His monthly salary is 58333, right........
you can first calculate his per day salary which will be 58333/31 and that comes to 1882Rs.
and now, you can calculate this into number of days present, i.e. payable days- which will be 1882*26 = 48932.
this will be amount wil be given to him.....
9th June 2007 From India, Thana
for same example : he joined on May 7th , Hence you would need to pay him for 25 days .
Caluclutae his salary per day : Monthly salary discussed as per Offer letter / No of days in this month will give you a day's salary .
Hence in this case 58333/31 will give you one day's salary which is equal to
1881. 70 . Now caluclate for 25 days ok 1881.70*25 = 47042.74
You gotto pay him 47042 before deducting Professional Tax/TDS/Income Tax.
Any questions let me know
4th July 2007 From India, Hyderabad
Every company has a different salary constituents. However I give an example of what a normal CTC components may look like. I have an excel sheet that will help you to calculate roughly your take away salary.
just fill in the CTC, Professional tax & the Income tax columns.
29th February 2008 From India
Could you please help me with the salary Breakup of Rs.5.50 Lakhs p.a.
This is the annual salary. There is also a Performance incentive of up to Rs. 2.0 Lakh per year.
Kindly suggest a salary breakup so that my tax outgo can be minimised as much as possible. I have a home loan and am servicing an emi also.
1st March 2008 From India, Calcutta
You can have this kind of breakup to save tax:
CTC 5.50 L-PA
BASIC--35% OF CTC--Fully taxable
HRA-50% OF BASIC IF IN METRO AND 40%OF BASIC-IF IN OTHER CITY(exempted upto certain limit on submission of rent receipt for 3 different months)
CONV. ALLOW:exempted upto Rs 800/pm
SPL ALLOW:REMAINING BALANCE OF CTC--fully taxable
ANY INCENTIVE--FULLY TAXABLE
LTA--EXEMPTED TWICE IN A BLOCK OF ANY FOUR YEARS
NEWSPAPER & PERIODICALS--EXEMPTED SUBJECT TO SUBMISSION OF BILLS
MEDICAL EXPENSES:--EXEMPTED UPTO RS 15,000/SUBJECT TO SUBMISSION OF BILLS
DRIVER SALARY--EXEMPTED SUBJECT TO SUBMISSION OF BILLS
VEHICLE MAINTENANCE---EXEMPTED SUBJECT TO SUBMISSION OF BILLS
PETROL--EXEMPTED SUBJECT TO SUBMISSION OF BILLS
MEAL VOUCHERS--FULLY EXEMPTED
MEDICAL REIMBIRSEMENTS--15,000/PA--TAX EXEMPTED
BELOW IS THE SAMPLE BREAKUP OF RS 5.50 L P/A
LTA-ONE MONTH OF BASIC
If u any further queries, just let me know.
2nd March 2008 From India, Gurgaon
Basic Salary, HRA, City Compensatory Allowance, Conveyance Allowance, Fuel & maintenance Reimbursement, Chauffeur Allowance, Car Lease / Laptop reimbursement, Other Reimbursements, Children's Education Allowance, Special Allowance, LTA, Medical Reimbursement, Bonus Pay, Performance Pay (fixed component, but payable annually), Employer's PF Contribution.
Company Car plus fuel plus maintenance - (mentioned in case of certain employees)
Other remarks on the Salary slip are:
All taxes and deductions are applicable as per Government Regulations.
Benefits are applicable as per Company Policy.
Work Tools - SIM Card for Mobile. Laptop
Please advise on the following:
1. Are these heads correct?
2. What all heads form part of the Gross Monthly Salary?
3. Which heads do not form part of the Gross Monthly Salary, but are included in the Annual CTC?
4. Any other observations.
15th March 2008
Thank you very much for your valuable contribution on Cite HR.
May I clarify one thing from your designed salary break-up that if we put some specific amount in the head of Petrol & Driver Re-imbursement than whoms name should a car either employer or employee name.
Defender Kr. Sharma
15th March 2008 From India, Delhi
We are a USA manufacturer, starting a manufacturing unit in Gujarat- and are not versed at all about certain salary practices. Our MD in India has advised that when we offer gross annual salary to our employees in an appointment letter, we should break it down in several classes (Base Salary, Housing Allowanace, Car allowance, Vacation allowance, book purchase, Medical benefits etc.) This is done- we are told- so that the employee has less severe tax consequences.
Our USA president (me) is originally from India- so is our USA HR Manager (Archna Dhingra). But we are not much knowedgable (pretty ignorant as a matter of fact)in this matter.
Can someone educate us on the following:
1. If we hire a Production Supervisor-say, at a salary of Rs 20,000 per month, what categories should we break this salary?
2. Are there any guidelines as to what percent to apply for which class? (such as 15% for Housing- etc)
3. Can someone point us to web-sites, article etc on this subject.
4. We are going to provide housing to some key managers and cars to some others. How do we apply the break-down to them?
5. If we give medical allowance or vacation allowance, do we need to ask for proof of expense? Does this not encourage submission of fake bills?
Thanks a lot for your kindness in sharing your knowledge and wisdom.
S.S. White Technologies
Piscataway, NJ, USA
16th March 2008 From United States, Hoboken
Whenever we talk about " Reimbursements", it always implies that all the reimbursements should be in name of " EMPLOYEE AND NOT ON EMPLOYER,S NAME" because employer is giving all those to save tax of an employee.
Hope now the concept is clear to u.
16th March 2008 From India, Gurgaon
can you pl amplify the terms mentioned in the salary calculation format
e.g TA,FEP,MA etc
also can you confirm the percentage applied for each head
can you give me salary caculation for
d) 70000 & 75000
so to enable the employee to save & reduce their tax burden
pl guide me
16th March 2008 From India, Mumbai
After posting my questions on salary structure, I searched the archives and found answers to most of my questions. This is a great website- and many of you have selflessly posted articles, spreadsheets etc. I wanted to send a thank-you e-mail to some of you- but it seems I cannot yet- until I make 5 postings.
So here is a general Thanks to all of you great guys.
SSWhite Technologies, USA
17th March 2008 From United States, Hoboken
As per above method let us take an example of Person whose salary has been decided as 10,000/-
Further for complete clarification let us assume he has taken single Leave Each in Month of January (31 Days) & April (30 Days) & February (28 Days)
As per "gayathri.suraparaju" suggestion:
Per Day Salary in January: 10,000 / 31 = 322.60
Per Day Salary in February: 10,000 / 28 = 357.14
Per Day Salary in April: 10,000 / 30 = 333.33
Therefore it means your Per Day Salary varies Per Month!!!!!!!!
Hence, The Person's Salary (after deducting only Leave) will be as follows:
Salary For January: 10,000 - 322.60 = 9677.4
Salary For February: 10,000 - 357.14 = 9642.86
Salary For April: 10,000 - 333.33 = 9666.67
Even though he has taken only single day off, there will be huge difference in Salary in particular months.
HENCE Correct Salary Calculation should be:
Monthyl Salary = 10,000
Total Days in Year: 365
Hence Per Day Salary = 10,000 * 12 / 365 = 328.77 (Constant Value, Non-Variable)
Therefore the Person's Salary for individual Months IRRESPECTIVE OF CALENDAR DAYS will very only if Person Takes a LEAVE. NOT OTHERWISE!!
I Hope Salary Calculation will be a lot simpler Now.
18th March 2008
Your help has been invaluable.
I am grateful for your help in this regard.
My questions are as follows:
1. I won't be having a vehicle, so the driver , petrol and vehicle reimbursements go out.
2. In the changed circumstances, can I have a higher allowance as communication allowance , books and periodicals allowance, or entertainment allowance.
3. I would be grateful if you could suggest a structure with the least tax outgo.
Annual Monthly Taxable
BASIC SALARY 264,000 22,000 264,000
HOUSE RENT ALLOWANCE (HRA) 158,400 13,200 132,000
TRANSPORT ALLOWANCE 9,600 800
SPECIAL ALLOWANCE 33,000 2,750 2,750
Total (A) 465,000 38,750 398,750
COMMUNICATION REIMBURSEMENT 36,000 3,000 -
LTA 22,000 -
MEDICAL REIMBURSEMENT 15,000 1,250 -
BOOKS & PERIODICALS 12,000 1,000 -
Total (B) 85,000 7,083 -
Annual CTC (A + B) 550,000 45,833 398,750
Is the above split adequate with reference to Income Tax outgo? Or can it be done better.
Thanks and regards,
19th March 2008 From India, Calcutta
I have to develop the package structure in my company. What is the method followed for dividing the salary in to various components. Example if we fix a salary of 6 lakhs what should be the Basic, HRA and other allowances. Are there any legal terms we need to comply. Also please help me in LEAVE structures. How many CLs and PLs will be allowed and any statutory laws to be followed. I am working for a US consulting company in Hyderabad.
25th March 2008 From India, Hyderabad