Understanding Payroll Components: How Do You Calculate Each Section and Slab Rate?

Hi All,

Can anyone tell me about how to calculate the payroll and sections under each payroll component (such as basic, HRA, CA, CCA, Medical Allowance, Vehicle Reimbursement, LTA, Gift Vouchers, PF, Special Allowance, Lunch Coupons, etc.) and slab rates for each section under payroll. Kindly provide your suggestions or refer me to any books.

Regards,
Simran.

Hi Sir,

Thank you for responding to my query. The information helps me a lot. Can you tell me the following: each component of payroll comes under which sections (basic, HRA, CA, CCA, Medical Allowance, Vehicle Reimbursement, LTA, Gift Vouchers, PF, Special Allowance, Lunch Coupons, etc.) and the possible ways to exempt from tax from these components. How fringe benefit tax is helpful to a person and the best possible ways to exempt from tax.

Regards,
Simran

Gift vouchers up to 5000/- per annum are also exempted from tax. Fuel expenses for the two-wheeler/four-wheeler up to 20,000 per month are exempted from income tax. In the case of availing conveyance at 800 per month, fuel expenses cannot be claimed for tax exemption. Food coupons are permitted up to 5400 per month, which can be exchanged for groceries.

Regards,
R. Ponraj

Thank you, Mr. Negi. Nice post and an important one. I was searching for this. It covered almost all components of compensation. It is really helpful for an initiator like me.

Thank you & regards,
Ajit

Dear Mr. Negi,

It's indeed a great piece of info. I just have one query regarding payroll. I want to know what are the basic and mandatory inputs for payroll.

Regards,
Vyakhya

Dear All,

Can anyone guide me on how to calculate gratuity and its other terms and conditions?

Regards,
Salman.

Dear Govind,

Good piece of information. If possible, will you please guide me on how to calculate gratuity, its formula, and other terms and conditions related to the Payment of Gratuity Act?

Thank you & regards,
Salman

Dear Govind ji,

It's nice to have the salary calculation. It is really useful. Furthermore, I request you if you can kindly send me or post on the web about the gratuity calculation and eligibility.

Regards,
Rex

Dear Khan,

Please find below the calculation of gratuity:

Keep in mind: basic wages + other allowances (excluding conveyance).

Payment of gratuity eligibility: 5 years completion (in case of termination due to health problems, other legal terminations not based on disciplinary practices (by the employer), the liability to pay from the employer's side).

15 days payment of basic wages (current pay rate) in a year.

Eligibility for a year: for working days including leaves with wages, accidents, maternity leaves, etc.

- 190 days (where the weekly working period is less than six) in 1 year & 95 days for six months.
- 240 days (for types of industry) in one year & 120 days for six months.

In a seasonal factory: 75% attendance.

Excess of six months assume a complete one year.

Maximum of gratuity: 3.5 lakhs.

Calculating: Monthly rate divided by 26 and then one day's wages multiplied by 15 for one year.

For daily wages/average piece rate * 15 for one year.

Nomination at form F within one year after joining.

Payment: Within 30 days from the payable date or within 30 days from the employee's left/last day.

Best regards,

Sajid Ansari

Hi sir,

Your presentation is very helpful for me, but let me know if the figures about minimum wage for skilled, unskilled, and semi-skilled workers are updated. Because according to my information, these figures are different.

Thank you, Govindji, for the PPT that you shared. It was very useful. Could you please explain how ESIC is calculated and what the significance of 15/26 is in the calculation of Gratuity? Additionally, what are the differences between the calculation of Gratuity as per the act and as per the rules, including the ceilings for both?

Negi ji, I always wait for your presentation; it is a really nice PowerPoint. Could you please tell me the sources of the books from which you updated yourself?

With regards,
Shish Ram Uniyal