Dear All,
Can anyone guide me on the following:
Normally, the industry standard states that the percentage of Basic pay should be 40% - 45% of the gross salary. However, some companies also consider 60% - 70% of the Gross Salary (though I know there is no fixed rule as per law on Basic pay).
1. My question is, if we take a lower percentage of basic, what will be the benefit to the employee?
1. Benefit to employer - less PF contribution to be made.
2. Benefit to Employee - ?
Is HRA linked to basic pay? Does a lower basic lead to more deductions that an employee can get on HRA?
2. What is the HRA percentage? I believe it is between 42% - 45% - am I correct?
For example, if the gross salary is 10000:
Basic (40% of Gross): 4000
HRA (42% of Basic): 1680
Please guide me on the percentages as I am designing the salary breakup for a construction chemicals company.
Regards,
Priyanka
From India, Delhi
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42Can anyone guide me on the following:
Normally, the industry standard states that the percentage of Basic pay should be 40% - 45% of the gross salary. However, some companies also consider 60% - 70% of the Gross Salary (though I know there is no fixed rule as per law on Basic pay).
1. My question is, if we take a lower percentage of basic, what will be the benefit to the employee?
1. Benefit to employer - less PF contribution to be made.
2. Benefit to Employee - ?
Is HRA linked to basic pay? Does a lower basic lead to more deductions that an employee can get on HRA?
2. What is the HRA percentage? I believe it is between 42% - 45% - am I correct?
For example, if the gross salary is 10000:
Basic (40% of Gross): 4000
HRA (42% of Basic): 1680
Please guide me on the percentages as I am designing the salary breakup for a construction chemicals company.
Regards,
Priyanka
From India, Delhi
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In the lower bracket of the basic salary, an employee is bound to lose due to a reduction in the employer's share of PF and gratuity benefits.
HRA - 50% of basic in metros (Chennai, Mumbai, Delhi, & Kolkata) and 40% in non-metros as per the I.T. Act.
I hope this is clear to you.
From India, Lucknow
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HRA - 50% of basic in metros (Chennai, Mumbai, Delhi, & Kolkata) and 40% in non-metros as per the I.T. Act.
I hope this is clear to you.
From India, Lucknow
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Hi Priyanka,
The contents of the salary breakup are as below. You can prepare it according to your own preference. HRA would be 50 or 60% of the basic salary.
- Basic
- HRA = 40 or 50% of basic
- TA = Rs. 800 (Exempted from Taxes)
- Other Allowance
- Mobile Reimbursement / Month
- Gross Per Month = Sum of all the above.
- Gross Per Annum = 12* Gross/Month
- PF Contribution = 12% of Basic/Annum
- ESI Contribution = 4.75% of Gross/Annum
- Medical = The mediclaim facility is provided to employees who are not covered under ESI, as the maximum ceiling for ESI is Rs. 10,000/Month. Any amount exceeding this will be covered under Mediclaim or will depend on company policy.
- Annual Total Cost = Gross Per Annum + PF + ESI
- Annual total cost is also referred to as CTC.
I hope this is clear to you now. Feel free to ask if you have any queries.
Regards,
Amit Seth.
From India, Ahmadabad
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The contents of the salary breakup are as below. You can prepare it according to your own preference. HRA would be 50 or 60% of the basic salary.
- Basic
- HRA = 40 or 50% of basic
- TA = Rs. 800 (Exempted from Taxes)
- Other Allowance
- Mobile Reimbursement / Month
- Gross Per Month = Sum of all the above.
- Gross Per Annum = 12* Gross/Month
- PF Contribution = 12% of Basic/Annum
- ESI Contribution = 4.75% of Gross/Annum
- Medical = The mediclaim facility is provided to employees who are not covered under ESI, as the maximum ceiling for ESI is Rs. 10,000/Month. Any amount exceeding this will be covered under Mediclaim or will depend on company policy.
- Annual Total Cost = Gross Per Annum + PF + ESI
- Annual total cost is also referred to as CTC.
I hope this is clear to you now. Feel free to ask if you have any queries.
Regards,
Amit Seth.
From India, Ahmadabad
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Salary breakup format.xls
Salary Breakup Annexure.doc