Dearness Allowance?

Hi,
can anybody tell me the actual advantage of having DA as a part of the salary structure. Is it statutory requirement? can there is an alternate to it like 'Other Allowance'
We have DA as a part of our salary structure. iam of the opinion that it is not required to have DA and we could convert it to other allowances. Plz correct me if iam wrong.
Regards,
Soumya Shankar

Hi
BASIC + DA are computed for statotory requirements.
there are lots of knowledge companies who are not providing DA in theie pay structure
U can do away with that
This is my experience and do require professional advice if am not correct
Regards
Rajesh B

Hi Soumya,
DA is a part of Statutory requirements along with BASIC component(Minimum Wages Act).
However if u donot wish to show DA in your salary statement,please make sure that the TOTAL GROSS is more as compared to only Basic+DA.
Regards,
PradeepAchar
:)

DA is not statutory.
It got introduced for neutralizing the inflation and protecting the rest of the compensation structure. Subsequently it became part in the union negotiations. Minimum wages act only includes it in defining wages.
It is not mandatory to have DA as part of wages.
You will find all the new industries do not have the DA component except in public sector.
Regards
Arif

Hi,
Thanks everybody for your valuable inputs. Plz let me know one more thing, what is the impact of DA on income tax?
Supposing the salary structure does not have anything like DA would the income tax payable be more....
Regards,
Soumya Shankar

It depends
if the amount in lieu of DA is added to non taxable component then it will not attract tax otherwise it will
Arif

Hi!!! all
As i hv bn strugleing for the same in quite some time.
plz let me know is there any statutory bound to pay DA as sal
component.If we nt shown in sal structure , wat would b the
consequenses?

Agreed. It is not compulsory to take Dearness Allowance as a part of salary structure, as Minimum Wages take care of inflation and DA aspects.
But, if suppose any indian commercial organisation adds DA in their salary structure, is it compulsory to revise it periodically ? What are the rules and legal criteria regarding fixation and calculation of DA ? If DA is separately shown in payshee, it is binding that DA percentage should be uniform for all employees ? Do employees have right to set DA amount as per their wish and comfort ?
Last but not the least, is it advisable for private company to keep DA as a part of their salary structure ?
Considered explanation from all learned friends of CiteHR family is solicited.

Hello All,
We can very well include the DA in the Basic salary and have a head in the salary slip as "Basic + DA". By doing this you can have 2 birds in one stone. In this case whenever the DA is increases or decreases you do not have to do any adjustments in it unless it is less than the minimum wages. If the DA increases by Rs. 250 then you have to increase the gross salary by Rs. 250 if it is not fitting in the minimum wages. DA is fixed by either the State Government or the Central Government only.
As said above you can show Basis + DA combined. In case you have a query by employee then get the current Dearness Allowance figure deduct it from your current Gross + DA and tell employee his DA amount (which is equal to current DA).
Regards,
Amod J