Assistant Manager-hrd
Nirav Gandhi
PP Bhattacharya
Exim And Admin.
+4 Others

This is Shruti. I am currently helping my husband in his Architecture firm. He has 6 employees. Till now no ones salary actually goes beyond the tax bracket, hence we have not given them any kind of salary break up like (Basic/Conveyance etc). We do provide salary slips to them in which their entire per month salary has been shown as Basic salary. Wanted to know if this practise is correct. In future if our employee size becomes 20, will this create a problem for PF calculation? Also if none of the employees come under the tax bracket, is it still advisable to provide them with some kind of salary break up.

From India, Mumbai
Dear Shruti,,
I would like to adivice u that provide salary slip to ur emp. if ur emp goes 20 then u hv to fibercate thier salary due to PF and ESi applicable to ur firm. PF to be deducted on Baisc+DA and ESI to be deduct on Gross salary. now u dedice should u provide salary slip or not.

From India, Mumbai
Thanks Nirav for your promp response, we do provide salary slips to all our employees but we show the entire amount as Basic salary. Wanted to know if this practice is correct?
From India, Mumbai
Dear Shruti,
it has been wrong practise show the entire amount as basic salary. i m providing u stracture it will help u to make slip.
Basic 40% of gross salary PF 12% on Basic
HRA 50% on Basic
Conv 800
Medical 1250
City Compansatory allow
Children Allow 200
Spicial Allow
this is for ur information.

From India, Mumbai
Hello Madam,
Please find below list of components which you can use for salary breakup.
* Basic
* Conveyance allow.
* Medical Reimbursement
* Education Allow.
* Uniform Allow.
* Entertainment Allow.
* Books & Peri Allow.
* Special Allow.
* Mobile reimbursement.
* Petrol Reimbursement.
* Food coupen allow.
* Other
For tax benefit of all employees you can use maximum reimbursement components so they can provides the bill to the company and take the maximum tax benefit.
Thanking you,

From India, Pune

It's perhaps a question of good ethics by an employer... and even if it is not necessarily a statutory binding, it enhances the goodwill of the employer. So, the question is... how good you wish to project yourself as an employer?? It also enhances employee's confidence for his employment with you if you really wish to retain him / her as long term prospect. Otherwise, normal tendency for any employee at his workplace is "helplessness".

Another thing is that the salary slip would also have the leave / attendance summary of the month and the accumulation of leaves, if any.

I also agree with Nirav's recommendation as well as break-up he has mentioned. Since the amount of remuneration is not very high, other allowances (fringe benefits) can be done away with. Good enough for your kind of set-up. I'd also recommend that even you can have your own salary slip (for whole or part of your earnings, depending on your discretion). After all, whatever deductions you make or deposit (in PF) comes back to you and at the same time, you are also hiving-off part of your IT burden. Therefore, think of it in long term perspective... you will realize the benefits.

Regards -

PP Bhattacharya

From India, Udaipur
Dear Shruti,
Do one thing firstly go for simple breakup like Basic & Other allowance only. currently keep the basic upto 6500 Max. & put all other in allowances.
Secondly contact your tax consultant ask him what perquisites item that we can show in the salary break so that employee can be more benifited for tax purpose. Currently you dont need this because all your employees are below tax bracket. but in future you can use it.
Take proper consultation for pf deduction & PT deduction. these are very important.
No act will give you salary breakup it is upto employer to decide breakup ang make their employees benificial.
I hope this much is enough.
Arun J.

From India, Hyderabad
Dear CEO SEARCH, u should read taxation book there is a chepater of Salary. it will help u purpose of salary bifercation and u also getting knowledge of salary and thier Component.
From India, Mumbai
Deaer Shruti

And All contributing members.

With due respect to all I would like to reply on the following points.

1. The firm of Ms Shruti is currently employing 6 persons only. Therefore they are not covered under EPF Act.

2. Whatever salary is being paid to the employees can be shown as consolidated salary without any break up. A break up is not mandatory untill a firm/company is registered under some applicable statute.

2. Payment of DA (Dearness Allowance) will become applicable when the firm is registered under relevant Shop & Establishment Act of the State or any other relevant Act. Here it may be pointed out that DA is declared two times in a year by the government. Therefore once you start showing an amount of DA in Salary Slip, you become liable to pay enhanced DA every time it is increased by the government.

3. Transport Allowance of Rs.800/- can be shown to given benefit of tax exemption to the employees, even if their income is not taxable.

4. Medical Allowance upto a maximum of Rs.1250/- can also be shown as it is th

From India, New Delhi
In continuation to above reply which got posted incomplete -
4. Medical Allowance upto a maximum of Rs.1250/- can be shown in pay slip. This is the maximum tax free amount provided it is reimbursed. But it is taxable when given alongwith salary

From India, New Delhi

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