Hie Vijay,
Though ur question is to Virendra. But I would like to present my views to that.
The company can calculate the Increaments on either Gross or CTC amount. Its completely on company's discretion. It also depends on how are u compansating ur employees, ie gross or ctc wise. Normally a percentage of the CTC is increased annually.
Bills are generally submitted for reimbursement benefits and not for allowances.
Definitely allowances and incentives are two different heads. An incentive can be fixed or variable (if performance based) while an allowance is normally a part of the salary which is usually kept fixed.
I hope i was able to suffice you a bit.

From India, Delhi

Hi All,

I have another question raised seeing this discussion.

Virendra mentioned about the Increments. How are increments calculated? Is it on Gross Salary or CTC?

If some one is getting a fixed allowance ( Legally the Term ALLOWANCE) does the Employee have to submit Bills for the same?

And to Virendra I guess Incentives and Allowances are/Should be categorised under different heads. ( correct me if am wrong).


Dear Vijay,

1. First of all if we are discussing about increment then its really a wast subject to understand. See, first of all after appraisal, you can able to dicided how to proceed. as per present trend you need to calculate minimum and Maximum % rise in salary with exeptional cases of non peroformer and excellent performer. Generally all this things depends upon the profits gain by the company. Then you have to rank employees as per performance who will get what. Generally increments are calculated on gross as well CTC, to get quantitive figure it is calculated on CTC, then as per latest trend it is calculated on gross permonth, as what exact rise employee is getting.

2. See some allowances are tax free (food coupon, travel etc) for which employer always ask for receipts and bills, and others may be rendered as salary componant, say education allowance, wash allownace etc, Now its depends upon your need as what objective you are serving; Any how Tax is a thing, which either employee has to pay or employer, considering that only salary structures are being made.

3.Incentives and allownces are always categorised as per level, there is no second opinon. If manager will travel from one destination to other his mode will be different and if peon then it will be different. But some incentives are specially in serivce industry say retail, hotel, are given with equall amount. @ target achievement incentives. such incentives may be given in terms of cash or by the suggestion of the group.




ctc included all the benifit what a company pay to there employee. its included pf contributin, esi contribution(if applicable), LTa and others fringe benifts.
all montery fund what are paied by the company for an employee comes in ctc(Cost To Company)
for more information mail me at
deepak malik

From India, Pune

Hi Madhuri, It was nice to see the salary breakup of your company,however can you explain on what basis HRA is being calculated. Normally it is 50% of basic sal in metros. Regards Arya
From India, Chennai
deepak thukral

Cost to the company or CTC as is popularly known is the way the company determines the cost which it has to bear before it employees a person.Now this cost to the company is broken up in such a way that even after discharging the statutory liabilites like contribution to CPF, Contribution to EST, Payment of Bonus the cost to the company remains the cost determined before hand.It must be understood that once the ctc is broken, the company will have to discharge the statutory liabilites based upon the pay structure created. For instance the limit for contribution to ESI is Rs.6500 as on date. Suppose tomorrow the limit is increased to Rs. 10000, the company will be at liberty to change the pay structure and will have to make the contribution on the enhanced amount. Though the company may at a later date when the annual increment etc is due may grant a lower increment to an employee to make up the loss of such contribution.
Deepak Thukral

From India, Chandigarh

Employer contribution does form part of the CTC.
CTC is the Cost To Company in totality that the employee would cost the company.
Infact you will have many employees argue with on this very same point,
stating that
1. As this contribution is part of the employer, why is it mentioned in the CTC?
2. The CTC looks very rosy, but ultimately the in hand package is not big shakes.
Here is where the negotiation skills of an H.R. person comes into play. Its very important as part of H.R. to let the employee know what exactly his in hand would be. You don't want to re start the entire recruitment process a week after the employee joins, cause you may just realize, HE HAS BEEN PICKED UP BY ANOTHER COMPANY....
The above is a fact right? :)

From India, Mumbai
Employer contribution is always the part of CTC but not the part of Gross salary. Regards Manish
From India, Delhi
Dear Ms. Nidhi,
The term CTC itself mentions Cost To Company. Most of the companies include every cost that is borne by the company for a particular position / employee. Now it is upto your company what to include & what to exclude. Generally PF is not excluded.
Exclusions are insurance or subsidised canteen or transport. But I feel even these should not be excluded if you are under CTC structure.
Coming to your question. If you are following GPA system then you should exclude PF in CTC system NO you can't.


A question which is answered a couple of times on this forum. CTC is nothing but the cost to the company. It should include the gross salary, the employer contribution of PF, any Performance based incentive, any other perks which the employee gets on joining the company. So, answering your question, Well...Employer contribution of PF (12% of (Basic + DA)) is included in CTC.

From India, Bangalore
hello all
can anybody help me
our company deducted PF for march and april but we got registration from may so we refunded employee contribution. My question is pf deducted as emplyer contribution from ctc should be refunded??
please advise.

From India, Hyderabad

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