Hr - Pharmaceutical Industry
Shilpi Jain Pahuja
Asst Manager - Hr
All are very true..
It depends on company salary structure, it vary from company to company.
Generally it varies from 35 to 50%... even it might be higher or lower also..
18th September 2007 From India, Ahmadabad
Then it also varies on what kind of organization is it? whether a firm or a trust or a ltd company etc...?
20th September 2007 From India, New Delhi
The contents of the salary break up is as below, you can prepare it at the suitability of your own. HRA would be 50 or 60% of basic.
CCA - 825/- is exempted from tax
Medical Reimbursement of 1250/month is exempted from tax
Gross Per Month = Sum of all the above.
Gross Per Annum= 12*Gross/Month
PF Contribution= 12% of Basic/Annum
ESI Contribution = 4.75% of Gross/Annum
Medical = The mediclaim facility provided to an employee who are not covered under ESI as the maximum ceiling for ESI is 10000/Month.
Getting more than this will be covered under Mediclaim or it depends on company policy
EX-Gratia/Bonus = A fixed amount as Bonus
Annual Fixed Gross Cost= Gross/Annum+ Ex-gratia
Annual Total Cost = AFGC + PF+ESIC
Annual total cost is also called as CTC.
Hope it must have helped you to clear your queries up to some extent.
20th September 2007 From India, Ahmadabad
I am starting from my input first............
First we decide the CTC of the person would be??
Break up of CTC.
Basic - 40% of ctc
HRA - 50% of basic
Tpt All - (800 if CTC less than 9000, 1000 if ctc less than 15000, 2000 if ctc above 15000)
Medical All - (optional if ESI is paid, else 10% on basic)
Special All - (ctc - pf-esi- bonus - Basic - hra - tpt all - medical all)
PF - 12% on basic
ESI - 4.75% on basic (optional, if medical all paid )
Bonus - 10% on basic and limit is upto 500
Net Salary (in hand ) = Gross Sal - PF - ESI (1.75% on basic)
This is the structure used by y co. but we are not giving any think in which emp. can save taxes.
I need suggestion from experts on how to design the salary structure so that emp. can save income tax.
Others, please contribute......./ Share yours co. salary structure, this would be good learning on compensation/ Salary issues.
22nd September 2007 From India, Mumbai
The main affecting industries are shop act and contract workers.
22nd September 2007 From India, Madras
AS far as saving tax is concerned, there have been more and more precise guidelines from IT Department. You can avail 15000 PA as Medical allowance. This is exempted subject to producing bills. You can benefit from Conv. Allowance - 9600 PA.
HRA if calculated @ 40 % of basis serves the purpose.
As such the investment and limits are set 100000 PA. So we cant do much with salary structure.
Many companies indulge into voucher payment which is not a professional way to save tax. Some time back the practice of food coupens were very famous but their limit is upto 15000 PA. This can be tried.
LTA Reimbursement is exempted for twice in a slab of 4 years. This is a good option. We pay LTA Reimb. of Rs. 20000 PA to managers. This helps.
Veiws from others invited please.
22nd September 2007 From India, New Delhi
I agree with you all that it depends on company's policy.
However, one should also take into consideration of local law to plan their tax payouts and statutory compliances.
For example in fixing 50% of salary for Metro cities and 40% for other cities are worked on the logic to avail House Rent Allowance exemptions to employees as per Income Tax Act in India.
Further, there are some labuor laws that are prevailing in India which needs consideration. Since past 18 months EPF department in Karnataka has taken a view that employers are reducing the basic salary to avoid PF contribution. They felt it as anti labour welfare practice and asking the employer who is paying less than 50% Gross Salary as basic salary to pay CPF contribution on Gross salary which includes allowances. Appeal by employers to Honorable high court has be set aside. It went in favour of department.
HR community should take note of these aspects while working out components of salary.
22nd September 2007 From India, Bangalore
According to Govt rules the Basic should be 60% of the CTC or 6500. If the basic is 6500 with a lesser % then there will not be any problem. But when the basic is less the 6500 then we should make sure that the basic is not less that 60%.
25th September 2007 From India, Coimbatore
Can you provide the Government rule to state that the basic should be 60%. In my 35 of compliance service I never heard such rule.It will really help me and persons like me. In my view if their is a contract of employment and the employee and employer agrees for some percentage of CTC as basic, may be it can be 60% or so.
Pl. highlight the rule
25th September 2007 From India, Madras
26th September 2007 From India, Bangalore