Developing a Salary Structure for a Poultry Dressing Plant: Can You Help Us Out?

Hi there! We are currently developing a salary structure for our employees. I'm working in a poultry dressing plant. Can anybody help us in structuring our salary?

Hi Elgie,

The contents of the salary breakup are as follows. You can prepare it according to your convenience. HRA would be 50% to 60% of the basic salary.

- Basic
- HRA
- CCA - 825/- (exempted from tax)
- Other Allowance
- Mobile Reimbursement
- Medical Reimbursement of 1250/month (exempted from tax)

Gross Per Month = Sum of all the above.
Gross Per Annum = 12 * Gross/Month
PF Contribution = 12% of Basic/Annum
ESI Contribution = 4.75% of Gross/Annum
Medical = The mediclaim facility provided to employees who are not covered under ESI, as the maximum ceiling for ESI is 10000/Month. Any amount exceeding this will be covered under Mediclaim or as per company policy.

Ex-Gratia/Bonus = A fixed bonus amount
Annual Fixed Gross Cost = Gross/Annum + Ex-gratia
Annual Total Cost = AFGC + PF + ESIC
Annual total cost is also referred to as CTC.

In addition to this, Food coupons, Holiday packages, and Furnishing items are included in their CTC.

I hope this information helps clarify your queries to some extent.

Regards,
Amit Seth.

Hi Amit,

Can you explain to me about the ESI percentage? You have shown 4.75% in the employer part in the CTC details that you have mentioned. Additionally, one part of PF, i.e., 12%, is mentioned. I need clarification on the remaining 1.75% of ESI and 12% of PF that is not mentioned in the CTC details posted by you.

Regards,
Amith R.

Hi Navroz,

Yes, very true. City Conveyance allowance of Rupees 825/- is exempted from Tax.

Dear Amit,

In CTC, we include only the employer's part as employees' contribution is already included in their gross salary. For instance, 1.75% of the gross salary is deducted from the employee's salary and contributed to ESI. Additionally, 12% of the Basic salary of the employee is deducted from their salary and deposited to PF. Therefore, we only include the employer's contribution in the CTC.

I hope your query regarding the same has been cleared.

Regards,
Amit Seth.

Dear Amit,

Thank you very much; it is very clear. However, I would like clarification on whether the ESI and PF deductions from the gross will affect the take-home pay, i.e., the net salary. Please correct me if I am mistaken.

Regards,
Amith R.

Dear Amit,

If one's basic salary is 5000/- rupees and his gross salary is 9000/- rupees, then his ESI contribution would be 1.75% of 9000 and PF contribution would be 12% of 5000/-. The net salary would be after deduction of both the contribution amounts from his gross, which is 9000.

Therefore, the net salary is calculated as Gross salary - (ESI + PF contribution).

I hope this clarifies things for you.

Regards,
Amit Seth

Hi Amit,

Thanks for your confirmation, but I have heard - read in some books that the conveyance is exempted from tax to the extent of Rs. 800/- per month. Hence, I need clarification.

Regards,
Navroz