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Payroll is done usually by the finance team or the designated hr executive handling payments and reimbursements of employees. Companies run their payroll process through the payroll software.
Below is basic computation of salary components practiced by firms, it differs as per company's own policies.
Basic Pay: 50% of Gross Salary
House Rent Allowance: 40% of Basic Pay
Conveyance Allowance: 1600 (above this figure becomes taxable)
Medical Allowance: Usually 1250
PF: 12% of Basic Salary+DA of the Employee (8.33% goes to EPS and 3.67% goes to EPF) 13% contributed by Employer(12% plus 1%=PF Charges is 0.5 and EDLI Charges is 0.5)
As per recent changes, all allowances will be made necessary in calculation of Basic Salary+DA but HRA is exempted. You would need to check news for latest updates.
Other deductions include TDS if salary is taxable(FY 2019-2020, ctc above 5 lakhs. Tax Deducted at Source when before distributing final income to employee, tds is deducted and deposited to govt if salary falls under taxable income. You can study Deductions under 80C-80RRB in which employee can claim deductions for tds deducted by means of investments made by employee under certain investments like ppf, lic policy, medical expenses, donation to charities, etc,), professional tax as per State rules as it varies from state to state, group health insurance, ESI 5%(4% contributed by employee and 1% contributed by employer only if gross salary is upto Rs 21000), etc.
Gross Pay-Deducations=Net Take Home Salary
Hope it helps, Senior members can advise better. Sample salary slip is attached for your reference.
Thanks and Regards,
From India, Delhi
dinesh-kumar1Well the CTC (Cost to Company) of an employee is contented with 1.) Basic of 40-60% from Gross Salary
2.) HRA 30-40% from Basic
3.) And the remaining Amount will be Separated as per the state and Central's Tax Norms
4.) In Deduction Section we had to Concentrate on EPF which 12% Employees earning salary and it was Limited with 15000/-