How Do I Create a Basic Salary Structure and Determine Payment Criteria?

Hi!

Can you guide me on how to prepare a basic salary structure, the criteria in which salary can be paid, etc...?

Regards,
Ram.

Hi,

The salary structure varies from company to company based on their C&B policies. Some of the basic pay heads used are:

1) Basic - 35% - 50% of Gross
2) HRA - 40% of Basic for Non-metro & 50% of Basic for Metro
3) Con - Max Rs. 800 per month, which is a maximum of Rs. 9600 per annum
4) Medical Reimbursement - Max Rs. 1250 per month, which can be a maximum of Rs. 15000 per annum
5) Special Allowance - Balance of Gross will be provided as Special Allowance

Statutory deductions:
1) PF
Employee Contribution - 12% on Basic
Employer Contribution - 13.61% on Basic
2) ESI - Applicable to employees whose Gross Salary is less than or equal to Rs. 10000
Employee Contribution - 1.75% on Gross
Employer Contribution - 4.75% on Gross

PT - It varies from state to state

Net Salary = Gross - PF (Employee Cont) - ESI (Employee Cont) - PT

CTC = Gross + PF (Employer Cont) - ESI (Employer Cont)

Regards,
Kartheka

Hi,

The salary received under the pay head special allowance is fully taxable. If you are in the higher salary bracket, it means you can split up your salary under the following pay heads to avoid tax:

- Uniform allowance
- Wash allowance

Additionally, you can split your salary under LTA, Car Hire, Petrol & Maintenance, Driver salary, etc., where FBT is applicable on the same.

Regards,
Kartheka R