Dear Seniors,
I recently joined a small company after my MBA HR graduation, and I'm new to this field. My point is that this company provides free food and accommodation for employees, but their salary is very low. For example, "X" has a salary of 4,500, and his accommodation costs the company 6,500. His earnings are low compared to deductions. How should his salary be quoted in the payslip?
Thanks in Advance
From India, Eluru
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2I recently joined a small company after my MBA HR graduation, and I'm new to this field. My point is that this company provides free food and accommodation for employees, but their salary is very low. For example, "X" has a salary of 4,500, and his accommodation costs the company 6,500. His earnings are low compared to deductions. How should his salary be quoted in the payslip?
Thanks in Advance
From India, Eluru
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Dear Feroz,
You can include the CTC. First, detail the earnings related to Food expenses and Accommodation, and then outline the same in deductions, which should equal the pay or salary slip.
Regards,
Giridhar
Organizational Expert
From India, Secunderabad
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You can include the CTC. First, detail the earnings related to Food expenses and Accommodation, and then outline the same in deductions, which should equal the pay or salary slip.
Regards,
Giridhar
Organizational Expert
From India, Secunderabad
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Dear Giridhar Sir,
Thank you so much for your support. Sir, could you please suggest under what head/column I should be adding F&A in the payslip? If you have a proforma of the payslip that includes Food and Accommodation, please provide me with that.
Thanks and Regards,
Feroz
From India, Eluru
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Thank you so much for your support. Sir, could you please suggest under what head/column I should be adding F&A in the payslip? If you have a proforma of the payslip that includes Food and Accommodation, please provide me with that.
Thanks and Regards,
Feroz
From India, Eluru
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Dear Feroz,
Why do you want to show a benefit as a part of the salary? Have you discussed how this expenditure by the company can come under fringe benefits if declared with the salary?
If your firm is offering a benefit or 'a non-cash reward', why include it in the payslip?
If you want to share the investment your firm is making on each employee, you might want to do it differently.
Here's my experience from a firm which used to claim the accommodation. We literally asked the firm to pay us the amount rather than making us stay where we didn't want to.
The same is the situation with the IT/BPO firms declaring the deductions for company transport. The employee may choose not to take it but avail the amount. This may not easily reflect as a loss, but try and think this in the long term. Imagine the firm spends X amount on transportation. If few employees claim money, that doesn't help the firm to take the transportation away. They still will have to spend and bear the cost. An incremental difference makes literally no sense while managing a very huge roster for the rest of the firm.
I am certain you have considered every repercussion before implementing it.
From India, Mumbai
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Why do you want to show a benefit as a part of the salary? Have you discussed how this expenditure by the company can come under fringe benefits if declared with the salary?
If your firm is offering a benefit or 'a non-cash reward', why include it in the payslip?
If you want to share the investment your firm is making on each employee, you might want to do it differently.
Here's my experience from a firm which used to claim the accommodation. We literally asked the firm to pay us the amount rather than making us stay where we didn't want to.
The same is the situation with the IT/BPO firms declaring the deductions for company transport. The employee may choose not to take it but avail the amount. This may not easily reflect as a loss, but try and think this in the long term. Imagine the firm spends X amount on transportation. If few employees claim money, that doesn't help the firm to take the transportation away. They still will have to spend and bear the cost. An incremental difference makes literally no sense while managing a very huge roster for the rest of the firm.
I am certain you have considered every repercussion before implementing it.
From India, Mumbai
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Dear (Cite Contribution),
Exactly my sentiments!
I do not understand why Mr. Feroz wants to show an inflated salary slip when the employees are not even getting the minimum wages.
On one hand, he is saying food is free, and on the other hand, he intends to show it in the salary slip.
The accommodation has been given for the convenience of the management and not the employees.
Even then, the accommodation costs Rs. 6500, and the salary is a pittance at Rs. 4500.
He has not given the details of the company, its business, or employees. But such a scenario is prevalent in many unorganized sectors, such as brick kilns, construction, etc., where forced labor is prevalent.
Or in textile/garment industries which are run as "sweatshops," meant only to exploit manual workers.
These constitute a nightmare for a conscientious HR, an HR with a conscience!
What is reflected from the query, how to include free food and accommodation in the salary slip, is a clear reflection and indication of this malaise.
Dear Feroze,
Once you include these amounts in the payslip, and an employee says that she (most likely a female employee, as evident from the case) does not want to avail of the company food and accommodation, then are you willing to pay it in cash?
Hope you have got enough information from the comments of seniors to understand the issue and proceed accordingly.
In any case, here we do not give suggestions or solutions to an issue that can be construed as unethical and unprofessional, as well as appears to be illegal (in case the Minimum Wages Act and Equal Remuneration Act are not being complied with).
Hope you will be able to explain to the company owners accordingly, just as an honest and upright CA/Company auditor or Internal Audit is able to put up its points to the management.
Warm regards.
From India, Delhi
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Exactly my sentiments!
I do not understand why Mr. Feroz wants to show an inflated salary slip when the employees are not even getting the minimum wages.
On one hand, he is saying food is free, and on the other hand, he intends to show it in the salary slip.
The accommodation has been given for the convenience of the management and not the employees.
Even then, the accommodation costs Rs. 6500, and the salary is a pittance at Rs. 4500.
He has not given the details of the company, its business, or employees. But such a scenario is prevalent in many unorganized sectors, such as brick kilns, construction, etc., where forced labor is prevalent.
Or in textile/garment industries which are run as "sweatshops," meant only to exploit manual workers.
These constitute a nightmare for a conscientious HR, an HR with a conscience!
What is reflected from the query, how to include free food and accommodation in the salary slip, is a clear reflection and indication of this malaise.
Dear Feroze,
Once you include these amounts in the payslip, and an employee says that she (most likely a female employee, as evident from the case) does not want to avail of the company food and accommodation, then are you willing to pay it in cash?
Hope you have got enough information from the comments of seniors to understand the issue and proceed accordingly.
In any case, here we do not give suggestions or solutions to an issue that can be construed as unethical and unprofessional, as well as appears to be illegal (in case the Minimum Wages Act and Equal Remuneration Act are not being complied with).
Hope you will be able to explain to the company owners accordingly, just as an honest and upright CA/Company auditor or Internal Audit is able to put up its points to the management.
Warm regards.
From India, Delhi
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As a matter of fact, I am also working with Ms. (Cite Contribution) and Mr. Raj Kumar. Your company will benefit from tax advantages for providing food and accommodation to employees under welfare-employees. However, displaying this on the payslip may lead to further issues. If the company takes advantage of reduced taxes while employees are burdened with fringe benefit tax, it is not acceptable. This approach would be detrimental to employees and could result in a higher attrition rate in your company.
As an HR professional, it is crucial to prioritize the well-being of employees and act as their advocate when discussing these matters with management. If you align too closely with management and appear to be controlled by them, you may lose the trust and cooperation of your employees. It's essential to maintain a balance between company goals and employee interests to foster a positive work environment.
From India, Kumbakonam
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As an HR professional, it is crucial to prioritize the well-being of employees and act as their advocate when discussing these matters with management. If you align too closely with management and appear to be controlled by them, you may lose the trust and cooperation of your employees. It's essential to maintain a balance between company goals and employee interests to foster a positive work environment.
From India, Kumbakonam
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Thank you so much seniors for helping me out and with lot of your time and effort.I would raise the same to my boss because I am just an employee not an employer. With Regards Feroz
From India, Eluru
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From India, Eluru
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Think of employees and the company both. By treating them in which manner, who will benefit? If there is a tax reduction for the company, then treat it differently, and if there is a tax benefit for employees, then treat it differently. Being a business organization, focus on the cost part rather than on overheads and other expenses.
From India, Bangalore
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From India, Bangalore
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I think I could guess the purpose of the employer. As we know, the CTC is what the employer spends for the employees apart from salary which is booked as expenses in the books of a/cs of the firm and accordingly IT computations takes place. It's seen in many employer that they aimed at showing the lowly paid employees as how much they really costs to the firm and wished to show all put together > Rs.10000 and it's not only Rs.4500.
Re.Fringe benefits, subject to the exemptions, whether shown included in the salary or stated separately under diff. heads these exp. gets added but still the FBT is payable, if applicable (as it is abolished in 2009 in the hands of employer)
Pl.read -01.12.2009
"The Indian government abolished the Fringe Benefit Tax (FBT) as part of its 2009-10 budget on 6 July 2009. This amendment, which shifts the burden of taxation on fringe benefits from employers to employees, will come into effect on 1 April 2010.
Fringe Benefit Tax was introduced in the 2005-06 fiscal year as a tax paid by employers on the portion of employee benefits not included within an employee’s salary. This included entertainment, gifts, concessional tickets for private journeys, employee stock options, etc.
As a result of the amendment, however, fringe benefits will now be taxed as perquisites and treated as taxable income. Employees will also be taxed on any sweat equity shares they own (shares given to employees on favourable terms), or employee stock ownership plans they participate in. They will also be taxed on any contribution in excess of INR 100,000 (USD 2,075) to an approved pension fund made by plan sponsors on their behalf."
In some firms the employer pays some Taxes incl. IT & FBT for and on behalf of the employees also.
From India, Bangalore
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Re.Fringe benefits, subject to the exemptions, whether shown included in the salary or stated separately under diff. heads these exp. gets added but still the FBT is payable, if applicable (as it is abolished in 2009 in the hands of employer)
Pl.read -01.12.2009
"The Indian government abolished the Fringe Benefit Tax (FBT) as part of its 2009-10 budget on 6 July 2009. This amendment, which shifts the burden of taxation on fringe benefits from employers to employees, will come into effect on 1 April 2010.
Fringe Benefit Tax was introduced in the 2005-06 fiscal year as a tax paid by employers on the portion of employee benefits not included within an employee’s salary. This included entertainment, gifts, concessional tickets for private journeys, employee stock options, etc.
As a result of the amendment, however, fringe benefits will now be taxed as perquisites and treated as taxable income. Employees will also be taxed on any sweat equity shares they own (shares given to employees on favourable terms), or employee stock ownership plans they participate in. They will also be taxed on any contribution in excess of INR 100,000 (USD 2,075) to an approved pension fund made by plan sponsors on their behalf."
In some firms the employer pays some Taxes incl. IT & FBT for and on behalf of the employees also.
From India, Bangalore
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Dear Feroz,
It's obvious employers provide various perks either as part of the salary package or in addition to the salary. Some examples of such perks are as follows:
1. Free or subsidized food provided in the canteen or through food coupons (e.g., Sodexo).
2. Free or subsidized transport.
3. Free or subsidized housing/accommodation.
4. Free or subsidized provisions, household articles, vehicles either directly or through employees' societies.
5. Leave Travel Allowance (LTA).
6. Interest-free or concessional interest loans.
7. Allowances for the maintenance of houses, furniture, vehicles, gardens/housemaids, newspapers/magazines, and fuel subsidies.
8. Provision of clothing (applicable in hilly regions) and remote location allowances based on the work location.
9. Allowances for higher studies and specialized training.
Imagine if all or some of these perks were added as a part of the salary in monetary terms and the impact on the inflated gross salary. Consider the consequences in the computation of Provident Fund (PF), Professional Tax (PT), Employee State Insurance (ESI), Gratuity, Bonus, leave encashment, and both employers' and employees' contributions towards these benefits. Ultimately, think about the impact on personal Income Tax (IT).
In reality, subsidized or free food and transport do not directly affect personal Income Tax. However, when these perks are converted into a part of the gross salary, either through a "contra" method or other means, it could impose an unbearable burden on both sides. Therefore, it's essential to carefully evaluate all aspects and implications before making a decision.
Thank you.
From India, Bangalore
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It's obvious employers provide various perks either as part of the salary package or in addition to the salary. Some examples of such perks are as follows:
1. Free or subsidized food provided in the canteen or through food coupons (e.g., Sodexo).
2. Free or subsidized transport.
3. Free or subsidized housing/accommodation.
4. Free or subsidized provisions, household articles, vehicles either directly or through employees' societies.
5. Leave Travel Allowance (LTA).
6. Interest-free or concessional interest loans.
7. Allowances for the maintenance of houses, furniture, vehicles, gardens/housemaids, newspapers/magazines, and fuel subsidies.
8. Provision of clothing (applicable in hilly regions) and remote location allowances based on the work location.
9. Allowances for higher studies and specialized training.
Imagine if all or some of these perks were added as a part of the salary in monetary terms and the impact on the inflated gross salary. Consider the consequences in the computation of Provident Fund (PF), Professional Tax (PT), Employee State Insurance (ESI), Gratuity, Bonus, leave encashment, and both employers' and employees' contributions towards these benefits. Ultimately, think about the impact on personal Income Tax (IT).
In reality, subsidized or free food and transport do not directly affect personal Income Tax. However, when these perks are converted into a part of the gross salary, either through a "contra" method or other means, it could impose an unbearable burden on both sides. Therefore, it's essential to carefully evaluate all aspects and implications before making a decision.
Thank you.
From India, Bangalore
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Dear friends,
Also note the following for your TAX planning:
TAX FREE PERKS U/S 17(2):
Medical benefits provided by the employer in their hospitals/clinics.
Tea and snacks or free food or beverages provided in office or factory or through paid vouchers which are not transferable and usable only at eating joints
Facilities of motor cars
Residential accommodation provided at site
Facilities of club or health club and similar facilities
Expenses on telephone including mobile phones
Employers contribution to staff group insurance scheme
Scholarship to employees or their children paid by the employer
Conveyance facilities
Refresher courses
Facility of guest house or holiday home
Entertainment expenses
Free ration to Armed Forces Personnel
Perquisites to government employees posted abroad
Certain perquisites to High Court and Supreme Court Judges
Rent free houses to certain persons
Laptop and computers provide by the employer for personal use of employee
Interest free or concessional loan if the aggregate dose not exceed 20000 in PY
Periodicals and journals required for discharge of work
Leave travel concessions as per terms and conditions
Modified Provisions:
Holiday facilities-Sec.3(7)(ii)
Free food- Sec.3(7)(iii)
Gifts - Sec.3(7)(iv)
Credit card facilities – Sec.3(7)(v)
Club facilities- Sec.3(7)(vi)
From India, Bangalore
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Also note the following for your TAX planning:
TAX FREE PERKS U/S 17(2):
Medical benefits provided by the employer in their hospitals/clinics.
Tea and snacks or free food or beverages provided in office or factory or through paid vouchers which are not transferable and usable only at eating joints
Facilities of motor cars
Residential accommodation provided at site
Facilities of club or health club and similar facilities
Expenses on telephone including mobile phones
Employers contribution to staff group insurance scheme
Scholarship to employees or their children paid by the employer
Conveyance facilities
Refresher courses
Facility of guest house or holiday home
Entertainment expenses
Free ration to Armed Forces Personnel
Perquisites to government employees posted abroad
Certain perquisites to High Court and Supreme Court Judges
Rent free houses to certain persons
Laptop and computers provide by the employer for personal use of employee
Interest free or concessional loan if the aggregate dose not exceed 20000 in PY
Periodicals and journals required for discharge of work
Leave travel concessions as per terms and conditions
Modified Provisions:
Holiday facilities-Sec.3(7)(ii)
Free food- Sec.3(7)(iii)
Gifts - Sec.3(7)(iv)
Credit card facilities – Sec.3(7)(v)
Club facilities- Sec.3(7)(vi)
From India, Bangalore
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I guess you want to add it to exclude it from the Minimum Wages Act. In fact, many organizations do this by categorizing it as a project allowance (in the case of a project in a different location) or any other allowance.
As I have also experienced this.
From India, Nasik
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As I have also experienced this.
From India, Nasik
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Dear HR (Anonymous),
Your situation seems to be in confusion. All the esteemed members suggested a correct and appropriate view in your case. Food and accommodation are not to be included in the payslip. It may be in CTC for reference purposes. I hope you can understand the whole idea for not including the food and accommodation in the salary slips of your employees.
Your company will get tax benefits for the food and accommodation provided to the employees under welfare-employees.
Showing it in the payslip will create further problems. Once the company takes advantage of reduced tax and the employees get levied with fringe benefit tax, it is not acceptable.
This situation will be against the employees and will lead to a higher attrition rate in your company.
As an HR professional, you must take care of the benefits of the employees and act as their representative to address issues with management.
So, act amicably, discuss this issue with your management, stating the pros and cons of the situation.
From India, Gurgaon
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Your situation seems to be in confusion. All the esteemed members suggested a correct and appropriate view in your case. Food and accommodation are not to be included in the payslip. It may be in CTC for reference purposes. I hope you can understand the whole idea for not including the food and accommodation in the salary slips of your employees.
Your company will get tax benefits for the food and accommodation provided to the employees under welfare-employees.
Showing it in the payslip will create further problems. Once the company takes advantage of reduced tax and the employees get levied with fringe benefit tax, it is not acceptable.
This situation will be against the employees and will lead to a higher attrition rate in your company.
As an HR professional, you must take care of the benefits of the employees and act as their representative to address issues with management.
So, act amicably, discuss this issue with your management, stating the pros and cons of the situation.
From India, Gurgaon
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I also agree with Mr. Boss2966. As an HR professional, we should be in favor of employees, not management. Mr. Firoz, our suggestion is that it should not be shown on the payslip. Even in our company, we provide free food, accommodation, and transportation, but we do not show it on the payslip. You should check if you are paying the minimum wages correctly.
Thanks & Regards,
Shashidhara.GK
HR Manager
From India, Bangalore
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Thanks & Regards,
Shashidhara.GK
HR Manager
From India, Bangalore
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Dear seniours,
Could you help me by answering the following question?????
(1) What are monitoring methods for Payroll activities??
(2) What do you do to stay current with provincial, federal, state, municipal regulations?
(3)8. How to measure/appraise your Payroll…position?
please help me out
From India, Hyderabad
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Could you help me by answering the following question?????
(1) What are monitoring methods for Payroll activities??
(2) What do you do to stay current with provincial, federal, state, municipal regulations?
(3)8. How to measure/appraise your Payroll…position?
please help me out
From India, Hyderabad
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If food and accommodation are free for you based on the circumstances of your state depending on the company, it is correct. But you need to consider the cost for rooms, food expenses, and traveling expenses compared to the outside world. It is better to ask for an improvement in salary if there are any mistakes. For what I know, I said.
From India, Mumbai
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From India, Mumbai
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Please let us know then what should reflect on the salary slip if we are considering a Flexi salary structure.
Is it possible that a few reimbursements (fully tax-exempt) should reflect on the slip so that the employee can't confuse at all?
Should I add food coupons, telephone bills, etc., and reflect them on the salary slip? (Most of our employees are millennials.)
1. Uniform Allowance:
2. Mobile / Telephone Reimbursement: Monthly cap normally of Rs 2000 per month. Please note that reimbursement can be claimed only for Postpaid Connections.
3. Children Education Allowance:
4. Children Hostel Allowance: You can claim a maximum of Rs 7,200 p.a. for 2 children.
5. Soft Furnishing Allowance: Max reimbursement is limited to justify the same. For Mid-Managers, Soft Furnishing Reimbursement is restricted up to Rs 50,000 depending on the salary of the person. The reason for soft furnishing reimbursement is that the employee needs to entertain guests at his residence for official purposes and the expense incurred to protect office furniture at the residence.
6. Newspaper, Books, and Periodicals: Cap the max limit to Rs 1000 per month.
7. Reimbursement of Conveyance Expenses:
8. Daily Allowance:
9. Research Allowance: Any amount spent and reimbursement claimed by the employee for academic research or other professional pursuits including training, short-term/online courses, etc., is fully exempted from income tax on the production of actual bills.
From India, Mumbai
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Is it possible that a few reimbursements (fully tax-exempt) should reflect on the slip so that the employee can't confuse at all?
Should I add food coupons, telephone bills, etc., and reflect them on the salary slip? (Most of our employees are millennials.)
1. Uniform Allowance:
2. Mobile / Telephone Reimbursement: Monthly cap normally of Rs 2000 per month. Please note that reimbursement can be claimed only for Postpaid Connections.
3. Children Education Allowance:
4. Children Hostel Allowance: You can claim a maximum of Rs 7,200 p.a. for 2 children.
5. Soft Furnishing Allowance: Max reimbursement is limited to justify the same. For Mid-Managers, Soft Furnishing Reimbursement is restricted up to Rs 50,000 depending on the salary of the person. The reason for soft furnishing reimbursement is that the employee needs to entertain guests at his residence for official purposes and the expense incurred to protect office furniture at the residence.
6. Newspaper, Books, and Periodicals: Cap the max limit to Rs 1000 per month.
7. Reimbursement of Conveyance Expenses:
8. Daily Allowance:
9. Research Allowance: Any amount spent and reimbursement claimed by the employee for academic research or other professional pursuits including training, short-term/online courses, etc., is fully exempted from income tax on the production of actual bills.
From India, Mumbai
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Dear Concern, Employer provide free food & accommodation to employees.please confirm its covered umder minimum wages. Regards/Sushil
From India, Ghaziabad
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From India, Ghaziabad
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Payslip.xls
Payslip Format.docx