Struggling with Salary Calculations in HR? Need Help Understanding Key Components

I am looking to pursue a career in Generalist HR. I recently attended an interview where the interviewers asked me about how to calculate an employee's salary. I realized I do not have a detailed understanding of this. Could you please help me with this matter?

Important Components of a Salary Breakup

I am interested in learning about the important components of a salary breakup in terms of percentages. Additionally, I would like to understand how to calculate PF, ESI, PT, TDS, etc., specifically for the years 2012 and 2013.

Thank you in advance.

Regards,
Shweta M

Understanding Payroll for Generalist HR Positions

If you are looking for any Generalist Position, then Payroll is important for that position. It is not so easy to learn everything in one shot. There are many criteria for Salary Calculation. For that, it is better to learn step by step.

Importance of Payroll in Reducing Income Tax

Normally, Payroll is designed to reduce the Income Tax (TDS) of the employees. So you should learn even Income Tax details for salaried employees. In a normal case, Payroll is calculated as follows:

- Basic will be 50% of the gross amount
- HRA is 50%-60% of the basic
- Conveyance Allowance is a maximum of 800/- PM
- Medical Allowance is a maximum of 1250/- PM
- The difference is Spl Allowance
- PF is 12% of the Basic Wages from both EE & ER
- ESI is 1.75% from EE & 4.75% from ER subject to Gross salary being below 15000/- PM
- For PT, there is a separate slab and should be calculated accordingly.

For more details, you can reach me anytime.

Regards