Hr Practices
Hiten Parekh
Hr - Pharmaceutical Industry
Hr & Admin

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there is a query I have, which one of the CA had asked me.
Is it a rule that the basic salary should not be less than the total of the allowances (HRA+Conveyance+performance)??
Also, I would be glad if you can assist me in designing the most appropriate salary calculator. I belong to an IT industry.
Rupali Varma

From United States, Cambridge
Hi Rupali,
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.
Other Allowance
Mobile Reimbursement / Month
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 now it will be very much clear to you,
if you have any query feel free to ask.
Amit Seth.

From India, Ahmadabad
But is it a rule that the Basic salary should not be less than the sum total of the other allwances?
Our salary calculator is as follows:
HRA (50% of basic)
Conveyance Rs. 800/- p.m.
Performance Allowance (30% of basic)
Dress allowance (balance fig.)
Please suggest.

From United States, Cambridge
the rule is : basic salary < total of all allowances? basic salary = total of all allowances? basic salary > total of all allowance?? Please clarify. Am really confused.
From United States, Cambridge
Hi Rupali, There is no any written rule regarding this... basic can be less than other allowances.. even it is in practice with some companies... Regards, Amit Seth.
From India, Ahmadabad
There is not rule regarding proportion of basic and allowances. Either you have misunderstood the CA or he is under wrong impression. - Hiten
From India, New Delhi
Dear Rupali..... There’s no written rule that Basic should not be less than the total of allowances. Regards, Bhavna
From India, Lucknow
To my knowledge also there is no rule for the salary break down. In some companies they calculate the salary back up with very less basic so that the PF contribution will be less. Vasanthi
From India, Madras
Hello All!!
Thanks for your replies. Please find attached the salary calculator we use in our office and comment, if there is anything wrong in it.
Dress Allowance, we take as the special allowance, i.e. balance of the total.

From United States, Cambridge

Attached Files
File Type: xls salary-sheet_107.xls (21.0 KB, 1032 views)

Can Some one please advice me if I can claim reimbursement of Entertainment expenses or Uniform Expenses. What will be the proportion of that over the basic and will it be tax free in my hands????
From India, New Delhi
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