The Code on Wages 2019 has brought significant changes to the salary structure and components in India. Here is a breakdown of the new salary structure along with the components included and excluded from the Cost to Company (CTC):
New Salary Structure with Components
1. Basic Salary: This is the core component of the salary structure and is usually a fixed amount paid monthly.
2. Dearness Allowance (DA): A component that aims to offset the impact of inflation on employees' salaries.
3. House Rent Allowance (HRA): Provided to employees to meet rental expenses for accommodation.
4. Conveyance Allowance: Reimburses employees for their travel expenses related to work.
5. Special Allowance: An additional amount paid to employees, often as a percentage of the basic salary.
Components Not Included in CTC
1. Statutory Bonus: While it is a mandatory payment, statutory bonus is not typically included in the CTC calculation.
2. Gratuity: A lump sum amount paid by employers to employees upon retirement or resignation, usually not considered in CTC.
3. Employee Provident Fund (EPF): While both the employee and employer contribute to EPF, the employer's contribution is not part of CTC.
It's important to note that the components excluded from CTC are crucial benefits provided to employees but are not factored into the overall cost to the company. Employers need to ensure transparency in communicating the salary structure to employees, including both the included and excluded components.
By understanding these components and their implications, both employers and employees can navigate the new salary structure as per the Code on Wages 2019 effectively.