Seeking Advice on Tax-Efficient Salary Structures and PF Registration Limits for HR Managers

Dear All,

I am Ramya Shankar, working at Biometric Co as an HR Manager. Here, the previous salary structure includes Basic, HRA, Conveyance, and Education Allowance. Normally, the conveyance must be a maximum of Rs. 800/-, but here it was 40% of CTC. Can anyone suggest the best salary structure to minimize the income tax benefits, ensuring it does not involve excessive reimbursements and hindrances in procedures?

Additionally, we are planning to register for PF, ESI, etc. Please provide the limit either in gross or basic for which the company does not need to contribute to PF.

I would be grateful to all if you could send your replies to my email ID: ramya@bioenabletech.com.

Regards, Ramya R

Ramaya,

Conveyance could be a maximum of 1600 for those who use a four-wheeler; for others, it's a maximum of 800. Once your company subscribes to PF and the employees enroll in PF membership (totaling 24% of the basic), there will be an additional tax-benefited amount.

Medical benefits of 15K per annum and LTA up to a maximum of 25K per annum (once within a two-year period) are tax-benefited. As for others, there is a Fringe Benefit to be paid by the employer, so that does not provide much assistance.

Would love to hear more thoughts.

Cordially,
Preet

Dear All,

I am also in the process of redesigning our company's salary structure. Can anyone send me a salary structure from any IT industry? We are also planning to introduce Sodexo lunch coupons. Can PF be made optional for employees? Does it have any impact on gratuity? I would like to know the IT industry trend to minimize tax and FBT for our employees.

Can anyone from the IT industry email me the salary slips?

Regards, Nupur

Dear Ramya,

Before redesigning the salary structure, the following points should be considered:

1. Flex plan benefits given to Executives: CTC will be divided into Gross (Taxable) and Flex plan benefits (Non-Taxable income).

2. Non-Taxable benefits extend to Car Plan, white goods, Personal travel, Medical Reimbursement, Food allowance, Educational Allowance, etc.

3. Before fixing the Gross Salary, we should consider the percentage of Basic, i.e., it will reflect in PF, Leave encashment, Gratuity, etc.

4. PF ceiling as per the act is less than or equal to Rs. 6500/-; if the basic is more than Rs. 6500/-, PF benefits need not be covered.

5. ESI Ceiling as per the act is Gross salary less than or equal to Rs. 7500/-.

6. Before fixing the Salary structure, you can refer to Income tax benefits.

7. CTC may be extended to Variable pay as well.

Thank you.