How To Reduce Tax For Both Company And Employee - PDF Download

Hi We are a start up company,
We need to pay 2different employee 6lakhs and 5 lakhs respectively.
So what kind of salry components would benefit both company and employee.
Please help us in evaluating best salary component.
Thanks for help in advance.

find enclosed a proposed structure for CTC 5 lacs. More options can be tried for best results.
source: hr.rajivchawla.com

Thanks for valuable suggestion Sir.
Since we are startup company can we have a pay where we can start salary to employee at low and make it high at year completion so that his CTC is still 5 lakhs?
Please help in solving this..
Thanks for the help Sir.

increase the annual portion in the structure. e.g.
1. Include performance linked pay or incentive as major component of CTC, which will be payable after the year end.
3. Keep Basic at a high %age, so that Bonus, Gratuity, Leave encashment grab a major amount.
2. Pay Bonus on full basic (sometimes companies pay Bonus on max. statutory ceiling i.e. 3500/-)
3. provide for Gratuity
This way, the monthly payout will be reduced and major liability will be shifted to year end or thereafter.
Another way can be to hire at less CTC with interim hike commitment i.e. to hire at less salary but to increase after, say, 6 months based on the performance. However, this solely depends on the mutual understanding of the employer and employee.