Finalizing Components for CTC-Based Compensation Structure
Need help finalizing the components to be added to the salary in a CTC-based compensation structure. Do we need to include HRA, food allowance, arrears, etc.?
Definition of Salary for Bonus Calculation
For the purpose of computing wages for bonus calculation, the definition of salary is given below:
(21) "salary or wage" means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include:
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance, or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production, and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation: Where an employee is given, in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee.
Reading into the RED colored portion of the definition above, all allowances except specifically excluded items would form part of the salary for bonus computation. However, Item (i), colored in green, is slightly confusing. This would mean that all "other" allowances would have to be excluded. Also, the value of food coupons is included based on the explanation of the definition.
From India
Acknowledge(0)
Amend(0)
Need help finalizing the components to be added to the salary in a CTC-based compensation structure. Do we need to include HRA, food allowance, arrears, etc.?
Definition of Salary for Bonus Calculation
For the purpose of computing wages for bonus calculation, the definition of salary is given below:
(21) "salary or wage" means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include:
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance, or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production, and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation: Where an employee is given, in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee.
Reading into the RED colored portion of the definition above, all allowances except specifically excluded items would form part of the salary for bonus computation. However, Item (i), colored in green, is slightly confusing. This would mean that all "other" allowances would have to be excluded. Also, the value of food coupons is included based on the explanation of the definition.
From India
Acknowledge(0)Amend(0)
Dear Ampuran, nowadays, all companies are paying more than the prescribed amount, i.e., Rs. 3500/-. The basic salary fixed is more than Rs. 3500/-. Hence, you can take the basic wages into consideration and calculate the bonus amount. Furthermore, all governments have also fixed the minimum wages above Rs. 3500/-.
Thank you.
From India, Kumbakonam
Acknowledge(0)Amend(0)
1189Thank you.
From India, Kumbakonam
Acknowledge(0)Amend(0)
I am looking to add the maximum components to the salary used to compute the limit, i.e., Rs 10,000. Therefore, I need clarification on whether HRA, food allowance, etc., can be included when considering the salary.
From India
Acknowledge(0)Amend(0)
From India
Acknowledge(0)Amend(0)
You cannot add HRA, Food Allowance, or the value of any house accommodation, supply of light, water, medical attendance, other amenities, services, concessional supply of food grains, or other articles to the Attendance Bonus or sales incentive.
Please try to give the maximum benefits to your employees so that they will provide maximum output with optimum productivity in return.
Regards,
From India, Kumbakonam
Acknowledge(0)Amend(0)
Please try to give the maximum benefits to your employees so that they will provide maximum output with optimum productivity in return.
Regards,
From India, Kumbakonam
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 CALCULATION.xls
Salary calculation.doc