Sometimes it is masked as performance bonus which depends on the performance ratings. Please cross check it with the Hiring manager
27th April 2014 From India, Mumbai
#AnonymousThanks (Cite Contribution) for your response, I will cross check with Hiring Manager but in email its written that in addition to CTC I am eligible for performance bonus which means performance bonus will be out of CTC, also i would like to know about Retirement Allowance because as they have mentioned clause :
Provident Fund (PF) will be 12% of basic. The Retirement Allowance is not paid if Provident Fund is opted for, in which case the Firm will contribute 12% of basic salary to your Provident Fund account.
so if I do not Opt for PF, will it payed yearly or after leaving the company?
Also If I want to adjust LTA in my monthly salary is it possible? or it can only be claimed / will be provided at year end?
Thanks & Regards,
27th April 2014 From India, Kalyan
My response to your query for each of the heads mentioned by you is as follows:
BASIC SALARY: This is payable monthly. It will count towards computing your contribution towards PF and Retirement allowance as well as determining the quantum of tax exemption for HRA.
HOUSE RENT ALLOWANCE: This is payable monthly. There is an amount which is eligible for exemption of Income Tax, which you would be able to claim in order to reduce the incidence of Income Tax.
TRANSPORT ASSISTANCE: This is payable monthly and is based on the engine capacity of the car you own. There is a certain amount that can be claimed as a tax deduction for this element as well.
SPECIAL ALLOWANCE: This is payable monthly. It is usually no different from Basic, except that by classifying it as a Special Allowance, it doesn’t get included for purposes of PF, Retiral, HRA etc computations. This is not like a “City Compensatory Allowance” as indicated by (Cite Contribution).
RETIREMENT ALLOWANCE: This is deductible monthly. It usually comprises deductions towards PF and any other retirement / superannuation funds that your employer may have towards which you would contribute.
PERFORMANCE BONUS: Usually, there is a targeted performance bonus amount indicated in the offer letter and this is included for the CTC computation. However, depending upon the performance of the employee, the actual payout would vary from a low of 25% of the target amount to a high of 200% of the target amount. Though most companies keep this range between 70% and 150%.
MEDICAL EXPENSES: This is payable monthly, usually for an amount of Rs. 1,250/= (aggregating Rs. 15,000/= per year). You are expected to produce bills for medicines etc to claim this as a tax deductible expense otherwise it will be charged for tax. The bills need not be produced monthly, but must be submitted prior to the end of the financial year. Most companies require submission of the bills etc by January.
LEAVE TRAVEL ASSISTANCE: This is a lump sum amount which can be claimed on the basis of submitting evidence of having incurred the expense for LTA. It is tax exempt for two occasions in a block of four years. It is very unlikely that this would be amortised on a monthly basis – usually it is paid in a lump sum because you need to produce evidence of having incurred the expense. It can be claimed at any time of the year when you take leave and travel. You would not need to wait till the end of the financial year.
RESIDENTIAL TELEPHONE / INTERNET: This is payable monthly as a reimbursement. Usually, this is either a fixed amount or subject to a maximum amount that can be claimed.
Trust this would bring some clarity.
28th April 2014 From India, Bangalore
Hope that helps him understand the components better.
Now coming to the take home calculation. The amount that he would finally get after all the deductions , its not what have been mentioned on the letter. But would be around or less than that.
PF is mandatory and is a better option. At the point of leaving the firm , the final amount can be drawn by closing the account. Its best, if the account is transferred.
Retirement allowance would be released when you leave the firm. Please confirm the taxable amount . Any allowance is susceptible to the taxes.
Whereas PF is a benefit . Please weigh your options on the final amount receivable and then choose.
Wish you all the best !
28th April 2014 From India, Mumbai
There is one clause mentioned in my current employer offer letter which says, Employee must serve 90 days notice period after acceptance of resignation (Smart clause), and Manager is not currently accepting resignation, so i decided to go for reminder email, Could you please help me writing reminder email or any alternatives so that I can have smooth exit from company, as next employer is asking for acceptance.
Looking forward for your valuable suggestion.
2nd May 2014 From India, Kalyan