Dear All,
I need your help in calculating the salary of an individual, i.e., ESI, PF, and all. What all components are included in salary? What is the difference between the two?
Looking forward to hearing from you.
Thanks,
Supriya
From India
Acknowledge(0)
Amend(0)
1I need your help in calculating the salary of an individual, i.e., ESI, PF, and all. What all components are included in salary? What is the difference between the two?
Looking forward to hearing from you.
Thanks,
Supriya
From India
Acknowledge(0)Amend(0)
Dear Supriya,
Salary consists of two parts: 1) Payments and 2) Deductions.
Payment refers to the part for which the Company pays cash as per the commitment, commonly known as Gross Pay. It may be consolidated or divided into components under which a Company makes payment. In the latter case, Basic is usually the compulsory component while the rest depends on the Company. HRA is another common component.
For example, some companies may provide DA, while others may not.
In addition to the above, Loans and Advances, Awards, Settlements, and Compensations are also present if applicable.
The next section is Deductions:
Under this category, all statutory deductions, Recovery of Loans and Advances, Taxes, Awards, and Settlements are present if applicable.
The statutory deductions include Provident Fund (PF) and the Employee State Insurance Act; Taxes usually include Income Tax and Professional Taxes.
Net Pay = Gross Pay - Total Deductions
For details on PF and ESI, please refer to the relevant acts or search this site for further information.
Regards,
SC
From India, Thane
Acknowledge(0)Amend(0)
Salary consists of two parts: 1) Payments and 2) Deductions.
Payment refers to the part for which the Company pays cash as per the commitment, commonly known as Gross Pay. It may be consolidated or divided into components under which a Company makes payment. In the latter case, Basic is usually the compulsory component while the rest depends on the Company. HRA is another common component.
For example, some companies may provide DA, while others may not.
In addition to the above, Loans and Advances, Awards, Settlements, and Compensations are also present if applicable.
The next section is Deductions:
Under this category, all statutory deductions, Recovery of Loans and Advances, Taxes, Awards, and Settlements are present if applicable.
The statutory deductions include Provident Fund (PF) and the Employee State Insurance Act; Taxes usually include Income Tax and Professional Taxes.
Net Pay = Gross Pay - Total Deductions
For details on PF and ESI, please refer to the relevant acts or search this site for further information.
Regards,
SC
From India, Thane
Acknowledge(0)Amend(0)
Dear SC,
Thanks for your help, but there is a specific procedure that is followed for calculating ESI and PF. What is the basic difference between them and how do we calculate them?
Regards,
Supriya
From India
Acknowledge(0)Amend(0)
Thanks for your help, but there is a specific procedure that is followed for calculating ESI and PF. What is the basic difference between them and how do we calculate them?
Regards,
Supriya
From India
Acknowledge(0)Amend(0)
PF & ESI - both are statutory deductions.
PF: To be deducted from all - 12% of Basic salary + DA (if being paid) and VDA (if being paid). The employer too needs to contribute an equivalent amount.
ESI: To be deducted at the rate of 1.75% from employees drawing a salary up to Rs. 7500/- gross per month, all allowances computed together. You need to ensure whether your organization's location is exempted from ESI Deduction.
Regards, Venkat
From India, Mumbai
Acknowledge(0)Amend(0)
PF: To be deducted from all - 12% of Basic salary + DA (if being paid) and VDA (if being paid). The employer too needs to contribute an equivalent amount.
ESI: To be deducted at the rate of 1.75% from employees drawing a salary up to Rs. 7500/- gross per month, all allowances computed together. You need to ensure whether your organization's location is exempted from ESI Deduction.
Regards, Venkat
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Supriya, Please send me any salary structure of your Company as attachment I will make the necessary changes and revert back. Regards, SC
From India, Thane
Acknowledge(0)Amend(0)
From India, Thane
Acknowledge(0)Amend(0)
Dear, We dont have any specific salary structure, no break up is there. I just wanted to gain an insight to the Payroll, just for my knowledge thats the thing thanks supriya
From India
Acknowledge(0)Amend(0)
From India
Acknowledge(0)Amend(0)
Dear Supriya,
Are you paid a consolidated salary?
For Consolidated Salary:
If your company is registered under ESI and PF, the deductions will be as follows:
- If the salary is Rs. 7500 or less: 1.75% of the salary for ESI.
- If the salary is more than Rs. 7500, there will be no deduction under ESI.
- 12% of the salary (since there is no separate Basic).
- Professional tax and Income Tax if applicable.
Regards,
SC
From India, Thane
Acknowledge(0)Amend(0)
Are you paid a consolidated salary?
For Consolidated Salary:
If your company is registered under ESI and PF, the deductions will be as follows:
- If the salary is Rs. 7500 or less: 1.75% of the salary for ESI.
- If the salary is more than Rs. 7500, there will be no deduction under ESI.
- 12% of the salary (since there is no separate Basic).
- Professional tax and Income Tax if applicable.
Regards,
SC
From India, Thane
Acknowledge(0)Amend(0)
Actually, a good post for discussion.
General salary components include:
1) BASIC
2) HRA (House Rent Allowance)
3) HMA (Home Maintenance Allowance)
4) CCA (if the job is in the city) (City Compensatory Allowance)
5) Medical (This component is an allowance for lower scales and reimbursement for higher scales)
6) LTA (This component is an allowance for lower scales and reimbursement for higher scales)
7) Professional Development Allowance (Only to be paid for higher scales)
8) ENT (only to be paid for higher scales)
These are the general components of GROSS SALARY.
Now, the other components of CTC:
9) PF (Employer's contribution, 12% of BASIC)
10) BONUS (if any)
11) ESI (If Applicable)
12) Conveyance (Depends on company policy)
13) Meal (Again depends on company policy)
Now, 1-8 (GROSS SALARY) + 9-13 (Benefits) = Cost To Company (CTC).
From the gross salary, your contribution PF and your contribution ESI are deducted, and LTA, Medical are deducted depending on your company policy or paid as an allowance.
ESI deductions are:
4.75% of Gross Salary = Employer contribution
1.75% of Gross Salary = Employee Contribution
This amount should be deposited to ESIC twice in a year.
- OCT - MAR contributions by the end of May 15
- APR - SEP contributions by the end of Nov 15.
I hope this clarifies the confusion about salary and stuff.
The point to be noted is... the above description is just the basics of salary, and there is a lot more to it.
For any queries, feel free to ask, I will try my best to answer the queries.
Regards,
Kiran.
From Netherlands
Acknowledge(0)Amend(0)
General salary components include:
1) BASIC
2) HRA (House Rent Allowance)
3) HMA (Home Maintenance Allowance)
4) CCA (if the job is in the city) (City Compensatory Allowance)
5) Medical (This component is an allowance for lower scales and reimbursement for higher scales)
6) LTA (This component is an allowance for lower scales and reimbursement for higher scales)
7) Professional Development Allowance (Only to be paid for higher scales)
8) ENT (only to be paid for higher scales)
These are the general components of GROSS SALARY.
Now, the other components of CTC:
9) PF (Employer's contribution, 12% of BASIC)
10) BONUS (if any)
11) ESI (If Applicable)
12) Conveyance (Depends on company policy)
13) Meal (Again depends on company policy)
Now, 1-8 (GROSS SALARY) + 9-13 (Benefits) = Cost To Company (CTC).
From the gross salary, your contribution PF and your contribution ESI are deducted, and LTA, Medical are deducted depending on your company policy or paid as an allowance.
ESI deductions are:
4.75% of Gross Salary = Employer contribution
1.75% of Gross Salary = Employee Contribution
This amount should be deposited to ESIC twice in a year.
- OCT - MAR contributions by the end of May 15
- APR - SEP contributions by the end of Nov 15.
I hope this clarifies the confusion about salary and stuff.
The point to be noted is... the above description is just the basics of salary, and there is a lot more to it.
For any queries, feel free to ask, I will try my best to answer the queries.
Regards,
Kiran.
From Netherlands
Acknowledge(0)Amend(0)
Well, sir, the information you gave provides a bird's eye view of the act and its rates. It would be better if anybody could provide some more useful information, such as:
1. The exempted allowances (if any).
2. Some special allowances exempt from ESI purview for a special kind of business. For example, uniform allowance, uniform washing allowance, and hair-cutting allowance are certain kinds of allowances exempt from ESI purview for a business dealing in security services.
I would like to learn more about the above. Thank you.
Acknowledge(0)Amend(0)
1. The exempted allowances (if any).
2. Some special allowances exempt from ESI purview for a special kind of business. For example, uniform allowance, uniform washing allowance, and hair-cutting allowance are certain kinds of allowances exempt from ESI purview for a business dealing in security services.
I would like to learn more about the above. Thank you.
Acknowledge(0)Amend(0)
Dear Kiran,
The information you provided on all the components in the salary was a very good explanation. I have one query that is haunting me... I want to know, out of the CTC, how much percentage of the whole amount comes in hand. I know it varies for different companies, but approximately, I want to know what percentage comes in hand.
Thank you,
Vikram
Acknowledge(0)Amend(0)
The information you provided on all the components in the salary was a very good explanation. I have one query that is haunting me... I want to know, out of the CTC, how much percentage of the whole amount comes in hand. I know it varies for different companies, but approximately, I want to know what percentage comes in hand.
Thank you,
Vikram
Acknowledge(0)Amend(0)
Hi Vikram, Simply speaking the deductions depends purely on your CTC. your Inhand amount would be 80-85% of your CTC. Hope this will answer your query. Regards, Kiran.
From Netherlands
Acknowledge(0)Amend(0)
From Netherlands
Acknowledge(0)Amend(0)
Hi Venkat,
After October 1, 2006, a Government notification has been issued stating that the ESI coverage has been increased to Rs. 10,000/- from Rs. 7,500/-. Therefore, employees whose gross salary is up to Rs. 10,000/- are required to pay ESIC contribution at a rate of 1.75%.
Regards,
Kaushik Mondal
From India, Calcutta
Acknowledge(0)Amend(0)
After October 1, 2006, a Government notification has been issued stating that the ESI coverage has been increased to Rs. 10,000/- from Rs. 7,500/-. Therefore, employees whose gross salary is up to Rs. 10,000/- are required to pay ESIC contribution at a rate of 1.75%.
Regards,
Kaushik Mondal
From India, Calcutta
Acknowledge(0)Amend(0)
To get a fair idea about the components, please visit http://incometaxindia.gov.in/general/computation.asp.
Regards,
Sathiyamoorthy Iyer
From India, Madras
Acknowledge(0)Amend(0)
Regards,
Sathiyamoorthy Iyer
From India, Madras
Acknowledge(0)Amend(0)
Hi, Everything okay. but for one point i.e. ESIC deposit is not six monthly basis rather on month on month basis. it is the return only, which is done twice in a year. thanks
From India, Baharampur
Acknowledge(0)Amend(0)
From India, Baharampur
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Salary Sheet & PF PT Calculation & Challan.xls