What Is Wrong In This Salary Break-up.....? - DOC Download

Hai User,
My current salary break-up is here i have enclosed, But i dont know this is right or wrong calculation. So please anyone help me to become a right salary breal-up. I am unsure about the accurate salary calculations. Pls find the attachment.
Thanks & Regards,
Ashok

Dear Mr. Ashok Sundar,
The calculations as per the enclosed sheet looks choosy. Besides, consider the percentage of actuals below as desired.
Components A
Basic - 35% of 26K = 7800/-
HRA - 20% = 5200/-
City compensaory all - 30% = 7800/- (this includes Lunch, Medical etc)
Employers Contribution 12% of basic or Rs. 780/- whichever is less = 630/-
Conveyance = 800/-
Spl. All = 3770/-
Total = 26000/-
Components B
Less: Deduction
P.F. ( Employees Contribution 12% of Basic or Rs 780/- whichever is less) = 630/-
P.F. ( Employers Contribution 12% of Basic or Rs 780/- whichever is less) = 630/-
Professional Tax = 200/-
Total = 1760/-
Components A-B = 26000-1760= 24240/- is your Net payable salary.
Performance Bonus or Ex-gratia in excess.
Hope this clarifies your query.

Hi Ashok,
The Salary breakup is not correct. There is no rule for the basic salary. Usually companies keep it between 30-40 % of your monthly salary.
You can keep it 35% as mentioned in the Sharmila's reply, which makes your Basic to 9100.
HRA has to be 50% of Basic, so the HRA will be 4550 (For exemptions you need to do calculations as per 3 rules of HRA exemption).
Conveyance is 800.
Medical 1250 (if needed) (Given either as reimbursement or as monthly allowance)
PF: 12% of Basic which will be 1092
Food Allowance: 1500 to 2500
LTA: usually 1 month Basic Salary for whole year, but no hard & fast rule. (can be claimned 2 times in a 4 year block, given either as allowance or reimbursement)
Special Allowance= Gross Salary (26000)- (Basic + HRA + Conveyance+ Medical+ PF+Food Allowance+ LTA)
Net: Gross - PF - Professioanl Tax (If its in your state)

Min HRA is to be 40% of Basic + DA
For Metro it is 50%
So how does HRA of 20% qualify????
City compensatory allowance is normally another name for Dearness Allowance which is different than food/medical or other allowance.
Rather than putting 3770 as spl allowance, we can give 1250 as medical allowance and remaining as spl allowance.
You said Comp A (salary) - Comp B (deductions)
Your deduction has Employer's PF contribution which IS NOT deducted from Salary. This would mean Employee is only giving both contributions.
Also note PT has a slab (This is atleast for Mumbai, I may be wrong for other cities, seniors pls advise.)-
For up to 5000 basic, PT is 0
5000 to 10,000 basic, PT is 150 pm
10,000+ basic, PT is 200 pm for Mar-Jan and 300 for Feb.
In this case PT = 150 and not 200.

Dear Mr. Ashok,
Ms. Ankita has rightly quoted. I would like to suggest the salary breakup as mentioned below :
A.) Earnings :
Basic (35% of Gross) : 9100 (most companies keep the basic from 30% to 40%)
DA (30% of Basic) : 2730
HRA (50% of Basic + DA) : 5915 (HRA is 50% of Basic & DA for metros & 40% for other cities)
Conveyance : 800
Employer's contribution in PF (12% of Basic or 780 whichever is lesser) : 780
Medical Allowance : 1250
Special & Other Allowance : 5425
Total Earning : 26000
B.) Deductions :
Employer's contribution in PF : 780
PF deduction from Employee's Salary : 780
Profession Tax : 150
Total Deduction : 1710
Net Salary : 24290
Seniors, please suggest for any change/s in the breakup. Would appreciate your inputs.
Regards,
Prabhat

Apart from PT and PF deductions, I think TDS deductions are also there....
Most companies deduct TDS per month rather than deducting Tax for March's salary to provide uniform salary every month

I think so yes...
Hence normally people do not give huge amount for special allowance.
They give food allowance - which is tax free to the extent of cost of a lunch and 2 tea in a day for the working days of the month. Lumpsum amount is around 1250-1500 pm
Other give food coupons like sodexo which is fully tax free and the amount is included in the CTC as food coupon
Try to give as many tax free benefits and allowances to the employees.

ankita
Thanks for your quick and valuable reply, I will consider your suggestion in my future...
again can you update me regarding HRA , is it compulsory to give 50% for metro and 40 % for other cities.
or may be it differ for city to city. anywhere is it notify that it should be 50% or 40%
need ur help
updateing salary str for my company from accounting year........
Thanks
Pratik

Yes it is statutory compliance to have HRA at 40% (50% for metros)
Companies are allowed to give more than that but this much is a bare minimum.
You can read more about it on -
1. 5 things you should know about HRA - 5 things you should know about HRA - NDTVProfit.com
2. Tax liability - Meaning of House Rent Allowance and HRA Exemption Calculation
and type HRA on the search bar of this site to see other relevant discussions on the topic.
Hope it helped.