Hi,
You may add the following allowances to the gross salary of this employee:
- Basic Pay
- House Rent Allowance (HRA)
- Conveyance/Transport/Fuel Maintenance Allowance
- Children Education Allowance
- Uniform Allowance
- Personal Allowance
Furthermore, I have drafted a rough CTC sheet that you may refer to for understanding. If anything else comes to your mind, please feel free to ask.
Warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
From India, Delhi
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141You may add the following allowances to the gross salary of this employee:
- Basic Pay
- House Rent Allowance (HRA)
- Conveyance/Transport/Fuel Maintenance Allowance
- Children Education Allowance
- Uniform Allowance
- Personal Allowance
Furthermore, I have drafted a rough CTC sheet that you may refer to for understanding. If anything else comes to your mind, please feel free to ask.
Warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
From India, Delhi
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Dear Sheena,
CTC/Gross salary composition varies from company to company. It is difficult to suggest unless I know the perks and benefits you extend to your employees. In general, 40% in higher and 50% in lower levels of CTC goes to Basic. 51.8% of basic goes to Basic Salary linked standard perks and benefits which include - Medical allowance, LTA, and retirals like PF, Gratuity, and Superannuation. If HRA in your case is a percentage of Basic, then this 51.8% will increase depending on the HRA percentage, which generally varies from 30 to 50% of Basic.
The rest you can allocate to conveyance, special allowance, uniform allowance, soft furnishing, education, etc. Any amount spent on keeping the person in service can be included in the CTC. Devising a CTC structure is based solely on company policy and agreed service conditions with the concerned employee. Please tell me if you require any further clarification.
With Warm Regards,
K.P. Misra
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CTC/Gross salary composition varies from company to company. It is difficult to suggest unless I know the perks and benefits you extend to your employees. In general, 40% in higher and 50% in lower levels of CTC goes to Basic. 51.8% of basic goes to Basic Salary linked standard perks and benefits which include - Medical allowance, LTA, and retirals like PF, Gratuity, and Superannuation. If HRA in your case is a percentage of Basic, then this 51.8% will increase depending on the HRA percentage, which generally varies from 30 to 50% of Basic.
The rest you can allocate to conveyance, special allowance, uniform allowance, soft furnishing, education, etc. Any amount spent on keeping the person in service can be included in the CTC. Devising a CTC structure is based solely on company policy and agreed service conditions with the concerned employee. Please tell me if you require any further clarification.
With Warm Regards,
K.P. Misra
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Yes, Mr. K.P. Misra, I fully agree with you. The salary structure is based on the company policy and the agreed conditions with the employees.
Normally, companies have a fixed head of salary for uniformity in the record only. Otherwise, there is no statutory compulsion for a fixed structure.
I am trying to give you the following heads of salary normally practiced in the industry and income tax-friendly also:
1. Basic - (it may include DA also) For higher salaries, it may be 30-40% of C.T.C., and otherwise, it may be 40 to 50% of C.T.C.
2. HRA - (40 to 50% depending upon the location Metro or non-Metro City as per Income Tax.)
3. Conveyance Allowance/Transportation Allowance - (Rs. 800 is exempted under Income Tax towards back and forth transportation of an employee, and the rest is taxable.)
4. Child Education Allowance - (Rs. 100 per school-going child, max. 2 children per month, is exempted under Income Tax.)
5. Uniform Allowance - (It is fully taxable, and a reasonable amount should be given for washing of uniform, i.e., 500 to 800.)
6. Special Allowance/Management Allowance (May be used for the adjustment of the balancing figure of salary structure.)
7. Books and Periodicals Allowance (Research and Professional Development Allowance RPDA) exempted if supported with Bills/Fee of Professional Institutions, etc.
Reimbursements: a. Medical Reimbursement (Rs. 15,000/- is exempted under Income Tax) b. Conveyance Reimbursement (should be supported with the bill of expenses) c. LTA (Alternate years are taxable.)
Perks: 1. Soft furnishing allowance 2. Performance Incentives 3. Vehicle maintenance and car usage 4. Efficiency Allowance.
Hope this gives you an idea of salary structures in practice, but it entirely depends on the company policy and ethos.
Thanks,
Mohd. Arif Khan
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Normally, companies have a fixed head of salary for uniformity in the record only. Otherwise, there is no statutory compulsion for a fixed structure.
I am trying to give you the following heads of salary normally practiced in the industry and income tax-friendly also:
1. Basic - (it may include DA also) For higher salaries, it may be 30-40% of C.T.C., and otherwise, it may be 40 to 50% of C.T.C.
2. HRA - (40 to 50% depending upon the location Metro or non-Metro City as per Income Tax.)
3. Conveyance Allowance/Transportation Allowance - (Rs. 800 is exempted under Income Tax towards back and forth transportation of an employee, and the rest is taxable.)
4. Child Education Allowance - (Rs. 100 per school-going child, max. 2 children per month, is exempted under Income Tax.)
5. Uniform Allowance - (It is fully taxable, and a reasonable amount should be given for washing of uniform, i.e., 500 to 800.)
6. Special Allowance/Management Allowance (May be used for the adjustment of the balancing figure of salary structure.)
7. Books and Periodicals Allowance (Research and Professional Development Allowance RPDA) exempted if supported with Bills/Fee of Professional Institutions, etc.
Reimbursements: a. Medical Reimbursement (Rs. 15,000/- is exempted under Income Tax) b. Conveyance Reimbursement (should be supported with the bill of expenses) c. LTA (Alternate years are taxable.)
Perks: 1. Soft furnishing allowance 2. Performance Incentives 3. Vehicle maintenance and car usage 4. Efficiency Allowance.
Hope this gives you an idea of salary structures in practice, but it entirely depends on the company policy and ethos.
Thanks,
Mohd. Arif Khan
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Hi Sheena,
The contents of the salary breakup are as below. You can prepare it according to your own suitability. HRA would be 50 or 60% of the basic salary.
- Basic
- HRA
- TA
- Other Allowance
- Mobile Reimbursement per 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 provided to employees not covered under ESI, as the maximum ceiling for ESI is 10000/Month. Amounts exceeding this will be covered under Mediclaim or as per company policy.
- Ex-Gratia/Bonus = A fixed amount as a bonus
- Annual Fixed Gross Cost = Gross/Annum + Ex-gratia
- Annual Total Cost = AFGC + PF + ESIC
- Annual total cost is also known as CTC.
I hope this clarifies things for you, and you can create a salary structure on your own.
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 suitability. HRA would be 50 or 60% of the basic salary.
- Basic
- HRA
- TA
- Other Allowance
- Mobile Reimbursement per 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 provided to employees not covered under ESI, as the maximum ceiling for ESI is 10000/Month. Amounts exceeding this will be covered under Mediclaim or as per company policy.
- Ex-Gratia/Bonus = A fixed amount as a bonus
- Annual Fixed Gross Cost = Gross/Annum + Ex-gratia
- Annual Total Cost = AFGC + PF + ESIC
- Annual total cost is also known as CTC.
I hope this clarifies things for you, and you can create a salary structure on your own.
Regards,
Amit Seth.
From India, Ahmadabad
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Hi,
Every company has different grades and designations nomenclature, which define the facilities for the employees. However, the percentage of basic pay and HRA remains the same across all grades. HRA may vary based on the city, with higher rates applicable in metro cities compared to non-metro cities.
These days, many companies offer a choice pay system to employees, allowing them to plan a specific portion of their salary to save on income tax, among other benefits. In these reputed companies, the portion of the salary beyond basic pay and HRA is termed as choice pay. Employees can select from various options such as food coupons, vehicle maintenance expenses, travel or conveyance allowance, children's education allowance, hostel/boarding allowance for children, and leave travel allowance.
Warm regards,
Umesh Chaudhary
umesh.chaudhary@ril.com
From India, Delhi
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Every company has different grades and designations nomenclature, which define the facilities for the employees. However, the percentage of basic pay and HRA remains the same across all grades. HRA may vary based on the city, with higher rates applicable in metro cities compared to non-metro cities.
These days, many companies offer a choice pay system to employees, allowing them to plan a specific portion of their salary to save on income tax, among other benefits. In these reputed companies, the portion of the salary beyond basic pay and HRA is termed as choice pay. Employees can select from various options such as food coupons, vehicle maintenance expenses, travel or conveyance allowance, children's education allowance, hostel/boarding allowance for children, and leave travel allowance.
Warm regards,
Umesh Chaudhary
umesh.chaudhary@ril.com
From India, Delhi
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Hi,
Sorry for forgetting to add, there is a provision of FBT, i.e., Fringe Benefit Tax, on various allowances such as furnishing allowance, book allowance, fuel and maintenance expenses, and it's almost 33%.
Further, you may read more about FBT on this link:
http://inhome.rediff.com/money/2005/aug/31tax.htm
OR
http://www.moneycontrol.com/mccode/n...?autono=164217
Warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
---
Fringe Benefit Tax
Fringe Benefit Tax ("FBT") was introduced by the Finance Act of 2005 as an 'additional income tax' payable by an employer at the rate of 30% (plus surcharge and education cess) on the prescribed value of fringe benefits deemed to have been provided by the employer to its employees.
Fringe benefit means any consideration for employment provided by way of:
- Any privilege, service, facility, or amenity, directly or indirectly, provided by an employer to employees/former employees, whether by way of reimbursement or otherwise (including former employees);
- Free or concessional tickets provided for private journeys of employees or their family members; and
- Employer's contributions to an approved superannuation fund for employees.
Fringe benefits do not include any privilege, service, facility, or amenity on which tax is paid or payable by the employee.
For the purposes of deemed fringe benefits, the FBT legislation has identified an exhaustive list of expenses that are deemed to be fringe benefits to the extent of 20% or 50% of the cost incurred or payment made by the employer.
FBT paid by an employer is not an allowable expenditure while computing the net taxable income of the employer. Furthermore, FBT is payable even where no income tax is payable by the employer.
Source: http://nasscom.in <link updated to site home>
From India, Delhi
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Sorry for forgetting to add, there is a provision of FBT, i.e., Fringe Benefit Tax, on various allowances such as furnishing allowance, book allowance, fuel and maintenance expenses, and it's almost 33%.
Further, you may read more about FBT on this link:
http://inhome.rediff.com/money/2005/aug/31tax.htm
OR
http://www.moneycontrol.com/mccode/n...?autono=164217
Warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
---
Fringe Benefit Tax
Fringe Benefit Tax ("FBT") was introduced by the Finance Act of 2005 as an 'additional income tax' payable by an employer at the rate of 30% (plus surcharge and education cess) on the prescribed value of fringe benefits deemed to have been provided by the employer to its employees.
Fringe benefit means any consideration for employment provided by way of:
- Any privilege, service, facility, or amenity, directly or indirectly, provided by an employer to employees/former employees, whether by way of reimbursement or otherwise (including former employees);
- Free or concessional tickets provided for private journeys of employees or their family members; and
- Employer's contributions to an approved superannuation fund for employees.
Fringe benefits do not include any privilege, service, facility, or amenity on which tax is paid or payable by the employee.
For the purposes of deemed fringe benefits, the FBT legislation has identified an exhaustive list of expenses that are deemed to be fringe benefits to the extent of 20% or 50% of the cost incurred or payment made by the employer.
FBT paid by an employer is not an allowable expenditure while computing the net taxable income of the employer. Furthermore, FBT is payable even where no income tax is payable by the employer.
Source: http://nasscom.in <link updated to site home>
From India, Delhi
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