Dear Sir, Our Company is separated from Gross salaryby Basic(60%), HRA(30%), Education (4%), Medical(4%) & Washing (2%). Which act is involved this. Please give clarification & act details.
From India, Mumbai
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3From India, Mumbai
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As Anurag has rightly said, no Act speaks about Salary Breakup, the only criteria is to abide by the Minimum Wages.
From India, Ahmadabad
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From India, Ahmadabad
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Agreed with Anurag & Saji's comments, I would also like to add that the basic pay should not be less than the prescribed minimum wages of the state. As far as conveyance is concerned, up to Rs. 800/- is non-taxable; anything above that amount is taxable. Similarly, for medical expenses, up to Rs. 1250/- is non-taxable, and any amount exceeding that is taxable.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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Compensation Structure Components
Compensation structure for any organization usually has three components: the base salary, which is fixed and regular for all employees; incentives designed to reward employees for good performance; and benefits, which are usually non-monetary in nature. A perquisite, also known as perks, is a special kind of benefit for a limited set of employees.
Determining Compensation Strategy
The conventional notion has been that the compensation strategy of an organization is determined by job/role evaluation, market competitiveness, and the budget. Keeping the long-term financial impact in mind (as all long-term benefits like gratuity, PF, pension, leave encashment, etc., are linked to the basic salary), organizations should make an attempt to keep the basic salary hovering around 30% to 50% of the gross. Care needs to be taken that the basic salary for every employee is higher than the minimum wages applicable to the respective industry (usually minimum wages are revised twice a year, whereas annual rewards happen on a yearly basis, so keeping in mind the historical data of rise in minimum wages, the basic salary should be fixed).
Other Components and Tax Efficiency
Regarding other components of the structure, one needs to keep in mind the prevalent industry practice and the applicable non-taxable limits for certain components like LTA, medical reimbursement, conveyance, canteen subsidy, food vouchers, HRA (50% for Metro and 40% for other cities) as set in The Income Tax Act. These non-taxable limits are subject to review every year, and one needs to keep reworking the CTC structure every year, keeping in mind giving maximum benefit to employees for a tax-efficient salary. Thus, the compensation structure should be dynamic in nature.
From India, Mumbai
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Compensation structure for any organization usually has three components: the base salary, which is fixed and regular for all employees; incentives designed to reward employees for good performance; and benefits, which are usually non-monetary in nature. A perquisite, also known as perks, is a special kind of benefit for a limited set of employees.
Determining Compensation Strategy
The conventional notion has been that the compensation strategy of an organization is determined by job/role evaluation, market competitiveness, and the budget. Keeping the long-term financial impact in mind (as all long-term benefits like gratuity, PF, pension, leave encashment, etc., are linked to the basic salary), organizations should make an attempt to keep the basic salary hovering around 30% to 50% of the gross. Care needs to be taken that the basic salary for every employee is higher than the minimum wages applicable to the respective industry (usually minimum wages are revised twice a year, whereas annual rewards happen on a yearly basis, so keeping in mind the historical data of rise in minimum wages, the basic salary should be fixed).
Other Components and Tax Efficiency
Regarding other components of the structure, one needs to keep in mind the prevalent industry practice and the applicable non-taxable limits for certain components like LTA, medical reimbursement, conveyance, canteen subsidy, food vouchers, HRA (50% for Metro and 40% for other cities) as set in The Income Tax Act. These non-taxable limits are subject to review every year, and one needs to keep reworking the CTC structure every year, keeping in mind giving maximum benefit to employees for a tax-efficient salary. Thus, the compensation structure should be dynamic in nature.
From India, Mumbai
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There is no law in India to split (gross) salary into various components except in some states where there is a law regarding minimum HRA. The law specifies that payment should be made according to the Minimum Wage Rates as per the scheduled industry. In certain states, Minimum Wage Rates include basic pay and DA/SpAll.
Thank you.
From India, Mumbai
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Thank you.
From India, Mumbai
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Creating a Competitive Salary Structure.doc
Compensation Structure.ppt