Hi Friends, I'm working as an HR for a new company and need to start payroll. Currently, we don't have any deductions in place. Please advise on how I should calculate salaries. Your prompt reply would be greatly appreciated.
With Regards,
Suma Patro.
From India, Hyderabad
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1With Regards,
Suma Patro.
From India, Hyderabad
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Each company has its own ways to calculate the salary, with some fixed and some variable components.
Components of Salary Breakup
➡ Basic Salary - The actual pay you receive for rendering services to the company. This is a taxable amount.
➡ Dearness Allowance - A taxable amount paid to compensate for the rising cost of living.
➡ House Rent Allowance - 50% of salary (basic + DA) if residing in a metropolitan city, or else 40%.
➡ Conveyance Allowance - Paid for daily commute expenses. Up to an amount of Rs 800 per month is exempt from tax.
➡ Meal Coupons
➡ Telephone/Mobile Bills
➡ Medical Allowance - Some companies offer medical care through health facilities for employees and their families. The cost of providing this benefit to the employee could also form part of CTC.
➡ EPF - Employers contribute an equal 12% to the provident fund account.
➡ Gratuity - Companies manage gratuity through a fund maintained by an insurance company.
➡ Leave Travel Allowance - It is the cost of travel anywhere in India for employees on leave. Tax exemption is allowed twice in a block of four calendar years.
➡ Insurance Benefits
➡ Fixed Bonus - Paid on the basis of employee performance, either monthly or in most cases annually. It is a fully taxable amount.
➡ Variable Bonus - The complete bonus amount is paid only on 100% achievement of the target; nevertheless, it still is included as part of your CTC.
Regards,
Narayan
[Email Removed For Privacy Reasons]
From India, Hyderabad
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Components of Salary Breakup
➡ Basic Salary - The actual pay you receive for rendering services to the company. This is a taxable amount.
➡ Dearness Allowance - A taxable amount paid to compensate for the rising cost of living.
➡ House Rent Allowance - 50% of salary (basic + DA) if residing in a metropolitan city, or else 40%.
➡ Conveyance Allowance - Paid for daily commute expenses. Up to an amount of Rs 800 per month is exempt from tax.
➡ Meal Coupons
➡ Telephone/Mobile Bills
➡ Medical Allowance - Some companies offer medical care through health facilities for employees and their families. The cost of providing this benefit to the employee could also form part of CTC.
➡ EPF - Employers contribute an equal 12% to the provident fund account.
➡ Gratuity - Companies manage gratuity through a fund maintained by an insurance company.
➡ Leave Travel Allowance - It is the cost of travel anywhere in India for employees on leave. Tax exemption is allowed twice in a block of four calendar years.
➡ Insurance Benefits
➡ Fixed Bonus - Paid on the basis of employee performance, either monthly or in most cases annually. It is a fully taxable amount.
➡ Variable Bonus - The complete bonus amount is paid only on 100% achievement of the target; nevertheless, it still is included as part of your CTC.
Regards,
Narayan
[Email Removed For Privacy Reasons]
From India, Hyderabad
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