Hi, My company's basic salary percentage is 70%, because of which we end up giving a lot more of PF and gratuity to our employees. I wanted to know if there is any way that we can alter this mistake now and get our basic % reduced?
From India, Mumbai
From India, Mumbai
What is your objective? If you have hired employees to work with you, the salary that is offered to them are the basic salary. You cannot contribute the statutory contributions on a percentage of that salary alone. In the case of PF, it is okay that the maximum contribution that an employer is BOUND to or LIABLE to pay is Rs 1800, being 12% of Rs 15000. In the case of gratuity, it is not the basic pay or 70% alone that should qualify for payment, it is the total salary on which the gratuity should be calculated. There are a few allowances excluded from the term wages and they are, overtime allowance, bonus, commission, house rent allowance and any other allowance. Any other allowance means allowance similar to commission, overtime allowance, bonus or HRA. Some companies have 'other allowance" as a component of salary. Please remember that there is no allowance called, "Other Allowance". There can be allowances for special purposes, like, education allowance which is paid to employees to take care of the education of their children, heat allowance which is paid to those who are exposed to heat as part of their employment, hill allowance which is paid to employees posted in hill areas etc. These are not paid universally to all the employees but are paid only to certain employees. HRA is also paid to those who have reside in rented houses. It is a compensatory allowance paid to an employee who has to reside in a rented house. It is not paid if the employee is residing in his/ her spouse's house. If both wife and husband are working in the same company, HRA will be available only to one perso, either wife or husband. If paid to all, then it will become part of salary.
It is true that the law has been interpreted and misinterpreted by auditors and consultants just to make the employers happy. But the same may not remain to help them always. Allowances camouflaged to deny the employees' benefits will come to light one day. Therefore, when 70% is not as per law, why should you think of further reducing it?
From India, Kannur
4193It is true that the law has been interpreted and misinterpreted by auditors and consultants just to make the employers happy. But the same may not remain to help them always. Allowances camouflaged to deny the employees' benefits will come to light one day. Therefore, when 70% is not as per law, why should you think of further reducing it?
From India, Kannur
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Salary-Note.doc
SALARY SHEET CALCULATION.xls