New to HR? Need Help Understanding Salary Breakdown Components Like HRA, PF, and More?

Hi all,

I am very new to the HR field and currently working in the ITES industry. Can anyone help me with creating a salary breakdown? I would like to know what percentages need to be considered to create a comprehensive salary breakdown. Specifically, I am interested in learning how components like HRA, PF, ESI, TA, DA, etc., are calculated.

Thank you for any guidance you can provide.

Dear Kartik,

This is Ritesh. I understand your question, and it proves that you are really new in the HR field.

Some of the things you mention are fixed, but most of the things are variable according to the city. For example, in a metropolitan city, your House Rent Allowance (HRA) is higher compared to a normal city. However, Provident Fund (PF) is fixed for all companies at 12% of your basic pay, and out of that 12%, 3.77% goes to the pension fund.

Other benefits like Travel Allowance (TA), Dearness Allowance (DA), etc., vary according to the company and their policy.

I would like to give you a personal suggestion that it's better for you to go through any Industrial Law book. I assure you that 80% of your queries can be solved by yourself.

I hope this information helps you. Please let me know your feedback on the same.

Ritesh
Recruiter Consultant, Hyderabad

Hi Ritesh,

Thanks for providing me valuable information. Can you suggest some good books on this topic that could help me out?

I am waiting for your reply.

Thanks,
Karthik

Hi Kartik,

Hope everything is fine on your end. I already told you that any law book will help you in this regard. If you want to know the names of some books, here are a few recommendations: for Personnel Management, "CV Mammoria" by K. Ashwatthapa, and for Law, any industrial law book will be helpful.

I suggest you go through "CV Maammoria"; it will benefit you in the long run.

Take care,
Goodbye

I would like to know about the HRA percentage calculation in the salary breakup.

Dear Colleague, it is suggested to align the structure with the proposed "wage" definition under the Code on Wages 2019 if your organization is ready to do that.

Proposed Wage Definition

As per the new definition proposed, three components—Basic, DA, and Retaining Allowance, if any—are to be 50% of the total CTC or total components.

Distribution of Remaining Components

The remaining 50% may be distributed to other heads like HRA and statutory aspects such as PF, ESI, Gratuity, Bonus, and so on, in the CTC structure in line with the statutory percentages stipulated under the relevant provisions. You may create a standard template for your use.

- PF is 12%
- ESI is 4.75%
- Gratuity at 15 days of Basic, DA, Retaining Allowance
- Leave Wages
- Bonus, and so on.

All the Best, God Bless,

Dr. P. SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu