Salary Slip Dilemma: How to Structure Hourly Pay and Handle Tax Deductions?

Hello everyone, I'm here again with a new doubt. I hope I will get the correct resolution on this.

Salary Distribution Structure

So, as my company is paying employees based on an hourly pay, here is how we pay somebody:

For 30 days: 8 hours per day * Total number of working days = 8 * 26 = 208 hours. (It covers Sundays. Paid leaves are added manually)

Per hour rate = CTC / 208

Salary for the month = Total number of hours the employee worked for that month * per hour rate + leaves

Now, this is the salary distribution structure of my company. Here are the two queries I have:

Queries Regarding Salary Structure

1. How can I create the salary structure for this, and what things should be added to the salary slip of the employee?

2. If I'm creating only a single component in the salary slip, which is "Time Sheet Component," and mention the complete earned amount based on an hourly rate on the salary slip and put a deduction of Income-tax only, does it create any issues in income tax for the employee? Will employees be able to claim loans using those salary slips?

I hope the issue is clear. Let me know if anybody needs any other information on this topic to clarify my doubt. Thanks!

There is a lot of confusion in the post. Usually, for any organization, there is a remuneration structure—it may be monthly, daily, hourly, etc. For hourly-rated employees in a pay structure where, on a monthly basis, Basic, HRA, and Other Allowances are paid, there should be an hourly rate for each item to be determined by the employer. It is not clear how the per hour rate = CTC/208. CTC usually includes all components of remuneration paid to any employee, whether on an hourly, daily, monthly, or yearly basis.

Please clarify in detail the whole remuneration structure, including payment timings, and your specific queries to get a proper reply from the seniors.

S K Bandyopadhyay (WB, Howrah)
CEO - USD HR Solutions
[Phone Number Removed For Privacy-Reasons]
USD HR Solutions – To strive towards excellence with effort and integrity http://www.usdhrs.in

You have not mentioned whether employees are on the payroll or on a contract basis. Secondly, this type of salary structure is not normally followed by companies. This could lead to confusion. Also, please note that at the time of assessing any department (PF/PT/ESIC, etc.), you will face difficulties explaining this to them.

Regards, Kiran Bhambid