Starting a Consultancy: How Do We Handle Salary Structures and Tax Queries?

Hi, I need help. We have started a Pvt Ltd Consultancy recently with only an MD and an AD, no executives. I am an Assistant Director and require guidance on salary structure, salary slips, and the essential tasks to manage initially.

Salary structure and slips

I also need formats for the salary I have received so far. We are paying the salary once every three months for the three-month period. Is this arrangement okay, or could it pose any issues? Do we need to pay Professional Tax to the Income Tax department?

Your assistance is much appreciated. Thank you.

Hello,

It's great to hear that you have started a Pvt Ltd Consultancy. Here are some steps and guidelines regarding the salary, salary slip, and other initial works.

1. Salary Structure: 💰🎈
As an Associate Director, your salary could be composed of various components like Basic Pay, House Rent Allowance (HRA), Special Allowance, and other allowances. In India, it's common practice to include other benefits like medical insurance, provident fund, and gratuity in the salary structure.

2. Salary Slip: 💴📆✅
A salary slip, also known as a payslip, is a document that your company should provide you after every payment cycle. It should detail your earnings, deductions (like tax and provident fund), and net salary. This document is essential for income tax purposes and when applying for loans or visas.

3. Salary Slip Format: 💲✍️🚫✍️
The format of a salary slip can vary, but it generally includes:
- Employee's Name, Designation, and Employee ID
- Month and Year of Payment
- Earnings: Basic Salary, HRA, Allowances, Overtime, etc.
- Deductions: Provident Fund, Professional Tax, Income Tax, etc.
- Net Salary
- Signature of the authorized person

4. Payment Frequency: 💵💱
Paying salary once every three months is not typical in India, and it might not be in compliance with the Payment of Wages Act, which stipulates that wages should be paid before the 7th day of the subsequent month. However, director's remuneration might have different rules, so consulting with a legal expert in this regard could be beneficial.

5. Professional Tax (PT): 💸🏛️
Yes, you need to pay Professional Tax if it is applicable in your state. PT is a state-level tax, and not every state in India imposes it. It's typically deducted from the salary and paid to the state government.

6. Initial Works to Maintain: 💪🧵
Initially, you should maintain records like attendance, work hours, leaves, salary, and tax-related documents. You also need to comply with various labor laws relevant to your company, such as the EPF and Miscellaneous Provisions Act, Payment of Gratuity Act, and Employees' State Insurance Act.

Remember, these are just guidelines, not legal advice, and it's always wise to consult with a legal or HR professional to ensure you're in compliance with all relevant laws and regulations.

Good luck with your new venture!