Dear Seniors, Please Confirm Me about the taxable parts of a salary.Can U Please provide me a Ideal Sal Structure ? Thanx With Due Regards Tribikram
From India, Delhi
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1From India, Delhi
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Income Tax is based on annual CTC (or Total Income), which includes all perks and perquisites.
Gross Salary is the total salary received on a MONTHLY BASIS. This excludes the annual components like LTA, bonus, etc.
CTC is Gross Pay + annual components + perks/benefits/perquisites, whether in cash or kind.
Net pay is the take-home pay, after all deductions.
Non-cash components like driver, sweeper, company accommodation, etc., which the employee does not pay for are excluded. They are part of CTC.
BASIC = 25-30% of CTC
HRA = Maximum 50% basic (Metro cities), 40% basic (non-metro cities)
Conveyance = Rs 800 (Max)
PF = 12% of basic (employers and employees' contribution)
ESI = 4.75% of gross salary (Employers' contribution)
= 1.75% of gross salary (Employees' Contribution)
These are the must components.
In case you have more Reimbursements; the better it's from a tax perspective.
The medical. TAX EXEMPT TO 15,000/-pa
Insurance (medical) - exempt
You can also pay Reimbursement of Uniform Expenses on a half-yearly or annual basis (it cannot be paid on a monthly or quarterly basis as you generally do not give more than two uniforms in a year).
The LTA should be paid once in two years to save tax. If you do not want your employees to save on tax, you can pay it annually. In that case, they will be able to save on tax every alternate year (or to be precise only twice in a block of four years).
Employees who are outside the purview of the Bonus Act can be paid a fixed amount or a fixed percentage of the basic as a bonus every year.
You can pay annual incentives either linked to the profitability of the Company or employees' performance parameters of the employee.
You also have the option of Leasing a car or house for employee tax benefits.
The list is endless, but please do consult your taxman/CA before all applicable rules.
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Gross Salary is the total salary received on a MONTHLY BASIS. This excludes the annual components like LTA, bonus, etc.
CTC is Gross Pay + annual components + perks/benefits/perquisites, whether in cash or kind.
Net pay is the take-home pay, after all deductions.
Non-cash components like driver, sweeper, company accommodation, etc., which the employee does not pay for are excluded. They are part of CTC.
BASIC = 25-30% of CTC
HRA = Maximum 50% basic (Metro cities), 40% basic (non-metro cities)
Conveyance = Rs 800 (Max)
PF = 12% of basic (employers and employees' contribution)
ESI = 4.75% of gross salary (Employers' contribution)
= 1.75% of gross salary (Employees' Contribution)
These are the must components.
In case you have more Reimbursements; the better it's from a tax perspective.
The medical. TAX EXEMPT TO 15,000/-pa
Insurance (medical) - exempt
You can also pay Reimbursement of Uniform Expenses on a half-yearly or annual basis (it cannot be paid on a monthly or quarterly basis as you generally do not give more than two uniforms in a year).
The LTA should be paid once in two years to save tax. If you do not want your employees to save on tax, you can pay it annually. In that case, they will be able to save on tax every alternate year (or to be precise only twice in a block of four years).
Employees who are outside the purview of the Bonus Act can be paid a fixed amount or a fixed percentage of the basic as a bonus every year.
You can pay annual incentives either linked to the profitability of the Company or employees' performance parameters of the employee.
You also have the option of Leasing a car or house for employee tax benefits.
The list is endless, but please do consult your taxman/CA before all applicable rules.
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Creating a Competitive Salary Structure.doc
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