Designing Salary Structures for Startups: How Do You Decide on CTC and Basic Pay?

I will be designing salary structures for the first time for a startup organization. I have just 2 days to finalize the same. Can you help me on how to design a salary structure? How do you decide on the CTC amount? In case the CTC amount is 4.25 lakhs, then how do you calculate the Basic? Once you know the basic, you can calculate the remaining amounts.

Once the CTC amount is finalized, there is a need to frame the salary particulars, which encompass:

1. Basic - 35% of CTC - Taxable - 12,400

2. DA - 5% of CTC - Taxable - 1,770

3. HRA - 40% of Basic + DA - Non-Taxable (NT) - 5,670

4. Conveyance - Fixed - NT - 800

5. Medical Allowance - Fixed - NT - 1,250

6. Lunch Allowance - Fixed - NT - 1,350

7. Special Pay - Balance - Taxable - 8,920

GROSS FIXED ............................................. 32,110

PF - 12% of BASIC + DA - 1,700

Gratuity - 5% of BASIC + DA - 710

Lunch - Fixed (Company Contribution) - 700

Insurance - Fixed (Company Contribution) - 200

GROSS BENEFITS ....................................... 3,310

CTC .................................................. ........... 35,417

Other factors such as LTA, Site Allowances, Variable pay, etc., will also come into play depending on the nature of the company and the work involved.

The amount for insurance varies from company to company.

I have divided your above-mentioned CTC of Rs. 425,000 by 12 months, which comes to around 35,416.66, so let's round up to Rs. 35,417.

Special allowances are a taxable amount and are mainly used to balance the CTC.

I hope this will help you understand the basic concepts of a salary structure.

Dear Namrata,

I've attached an Excel sheet on CTC calculation for your reference. I downloaded this file from CiteHR; hope it helps you.

Regards,
Jessie J

Basic 30% -> HRA 50% of Basic. Personal Allowance/Special Allowance/City Compensatory Allowance: difference of all. Food Coupons: 1300/2600. Business Reimbursement: as per designation. PLI: the percentage fixed as per designation. PF: Mandatory 12% of basic or 6500. LTA: As per level. Anything more, do let me know. Thanks.

Hi Guys,

As requested, I am attaching two files. Please check whether they clarify your queries. If not, kindly specify exactly what you are looking for, as it will make it easier for all of us.

Regards,
Jessie J

Hi, I have one question. If the salary amount is 60k monthly and there are no deductions or PF facility in a startup company, what is the breakup of the salary?