Confused by Payslips? Let's Break Down Salary, Income Tax, HRA, and FBT Together

Hi friends,

I want to know how salary is calculated, along with terms like income tax, HRA, and FBT. I saw a payslip and found it difficult to understand. I think you got my question, if not, please let me know, and I will ask in a clearer way.

Thanks in advance,
Kunal

Hi Kunal,

Salary structure varies from organization to organization. For example, some organizations provide 60% as basic salary along with Dearness Allowance and allocate 40% towards other allowances such as HRA and Conveyance. Therefore, your PF share (12%) will be deducted based on the basic salary.

Regarding Income Tax, the TDS amount depends on the income tax slab within which your salary falls. If you are unfamiliar with the Income Tax Slabs, please let me know.

I believe this addresses your queries. If not, feel free to message me.

Thanks,
Garima

Hi,

To add further to this discussion, there are different things that should be taken care of by you, and some are as follows:

1. You should know which Allowances are Fully Taxable, Partially Taxable, and Fully Exempt.

2. To Calculate the Tax for your Employees, you should also have knowledge of Perquisites, like which Perks are Taxable and which are Exempt from Tax.

3. After considering the above, you should take into account the Investments made by your Employees.

4. In the Payslip, there are various deductions like PF (which is 12% of Basic), ESIC (1.75% of Gross Salary), and Professional tax depending on the State as well as Salary.

5. Tax Computation slabs (General):

- 0 - 1,00,000 = Nil
- 1,00,001 - 1,50,000 = 10%
- 1,50,001 - 2,50,000 = 20%
- 2,50,001 and above = 30%

For Women, the Exemption limit is up to 1,35,000 and for Senior Citizens, it is up to 1,85,000.

If you have further queries, do contact me at amol@hrprowess.com.

Thanks and Regards,

Amol Agaskar (Sr. HR Executive - HR Operations)

HRprowess

Dear Kunal,

You should be more concerned about the deductions related to the HR Department, such as PF and ESI. For other matters like Income Tax and FBT, you should seek references from your Accounts Department. However, for your knowledge, you can review the Ready Reckoner of Income Tax.

Thanks,
Aditya