hi , i am new to the Payroll can any one help me to how to calculate the basic payroll and about the percentages for pf,hra,da.
From India, Hyderabad
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3From India, Hyderabad
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Salary Components in the Payroll System
In the payroll system, salary has different components like basic, HRA, travel allowance, and other special allowances.
- Basic: 60% of gross for metro cities, whereas 40% for non-metro cities.
- HRA: 50% of basic.
- Travel allowance: Fixed at $800.
- Other special allowance: It is an adjusting figure of all, i.e., (gross - basic - HRA - TA = special allowance).
PF Deduction for Employer
For PF deduction for the employer, it is 13.61%, including administration charges (12% PF + 1.61% admin charges). The ceiling limit is up to $15,000, and the basic should not be less than minimum wages.
Thanks,
Neetu Bisht
From India, New Delhi
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In the payroll system, salary has different components like basic, HRA, travel allowance, and other special allowances.
- Basic: 60% of gross for metro cities, whereas 40% for non-metro cities.
- HRA: 50% of basic.
- Travel allowance: Fixed at $800.
- Other special allowance: It is an adjusting figure of all, i.e., (gross - basic - HRA - TA = special allowance).
PF Deduction for Employer
For PF deduction for the employer, it is 13.61%, including administration charges (12% PF + 1.61% admin charges). The ceiling limit is up to $15,000, and the basic should not be less than minimum wages.
Thanks,
Neetu Bisht
From India, New Delhi
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For the last financial year, I created three components for salary: Basic, DA, and Vehicle Allowance. Therefore, the PF is deducted on Basic + DA. However, in the future, I want to change this criterion as it leads to a heavy PF deduction. Can we change the components for existing and new employees?
Thanks,
Richa
From India, Kota
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Thanks,
Richa
From India, Kota
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Salary Bifurcation in Payroll
In payroll, you can bifurcate your gross salary by using the following percentages:
- Basic: 60%
- HRA: 30% (HRA is generally half of the basic)
- Conveyance Allowance: ₹800 (up to ₹800 is non-taxable)
- Special Allowance: You have to adjust the remaining amount.
For example, if your gross salary is ₹10,000, the breakdown would be as follows:
- Basic: ₹6,000
- HRA: ₹3,000
- Conveyance Allowance: ₹800
- Special Allowance: ₹200
I hope this helps you understand the salary bifurcation process. Let me know if you have any questions.
Best regards
From India, Vadodara
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In payroll, you can bifurcate your gross salary by using the following percentages:
- Basic: 60%
- HRA: 30% (HRA is generally half of the basic)
- Conveyance Allowance: ₹800 (up to ₹800 is non-taxable)
- Special Allowance: You have to adjust the remaining amount.
For example, if your gross salary is ₹10,000, the breakdown would be as follows:
- Basic: ₹6,000
- HRA: ₹3,000
- Conveyance Allowance: ₹800
- Special Allowance: ₹200
I hope this helps you understand the salary bifurcation process. Let me know if you have any questions.
Best regards
From India, Vadodara
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Please let me know if we can change the DA amount session wise or it remains fixed .
From India, Kota
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From India, Kota
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Salary Components Breakdown
In addition to what other respected members have suggested:
- **Basic:** 60% of gross (metro: non-metro)
- **HRA:** 20 to 40% of Basic
- **Transport:** 800
- **Education:** 200 (100 for each child, max. for two children)
- **Medical:** 1250 (provided supported document for tax exemption, max. limit 15000)
- **Uniform:** XXX (for the professionals who used to go out for business meetings)
- **Special:** XXX
Example Calculation
For example, if the gross is 20000 per month and the location is non-metro:
- **Basic:** 8000
- **HRA:** 3200
- **Transport:** 800
- **Medical:** 1250
- **Uniform:** 2250
- **Special:** 4500
Hope this helps.
From India, Ahmadabad
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In addition to what other respected members have suggested:
- **Basic:** 60% of gross (metro: non-metro)
- **HRA:** 20 to 40% of Basic
- **Transport:** 800
- **Education:** 200 (100 for each child, max. for two children)
- **Medical:** 1250 (provided supported document for tax exemption, max. limit 15000)
- **Uniform:** XXX (for the professionals who used to go out for business meetings)
- **Special:** XXX
Example Calculation
For example, if the gross is 20000 per month and the location is non-metro:
- **Basic:** 8000
- **HRA:** 3200
- **Transport:** 800
- **Medical:** 1250
- **Uniform:** 2250
- **Special:** 4500
Hope this helps.
From India, Ahmadabad
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Most of the members have provided answers to your query. I hope you will benefit from it. Here are some additional insights from my side based on my understanding.
Conventionally, Basic Salary Percentage
Conventionally, you will find basics ranging from 30% to 60% in most private concerns. However, your decision should be guided by the implications of that percentage and your company policies.
Implications
- The higher the basic, the higher the cost to the company in terms of contributions to statutory compliance. Therefore, based on whether your company is welfare-driven or cost-driven, you should intelligently choose the right percentage.
- Secondly, although contributions to EPF/ESIC are for the betterment of employees, the benefits realized are typically long-term (e.g., after retirement or voluntary withdrawal after a period). The choice of the basic amount will impact the contributions from the workers' pockets. For example, a highly-paid employee may not feel a significant impact on their cash in hand due to contributions, whereas a low-paid employee may be more concerned about meeting monthly expenses rather than future benefits. Worker satisfaction is a crucial consideration.
Industry Type and Labor Turnover
Another factor to consider is the type of industry you are in and the prevailing labor turnover. For instance, in a BPO with high labor turnover, opting for a lower basic amount could keep both employees and employers satisfied and potentially address attrition. Conversely, in traditional industries where employees tend to stay long-term, a higher basic amount may be more suitable.
Regards,
Manish
From India
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Conventionally, Basic Salary Percentage
Conventionally, you will find basics ranging from 30% to 60% in most private concerns. However, your decision should be guided by the implications of that percentage and your company policies.
Implications
- The higher the basic, the higher the cost to the company in terms of contributions to statutory compliance. Therefore, based on whether your company is welfare-driven or cost-driven, you should intelligently choose the right percentage.
- Secondly, although contributions to EPF/ESIC are for the betterment of employees, the benefits realized are typically long-term (e.g., after retirement or voluntary withdrawal after a period). The choice of the basic amount will impact the contributions from the workers' pockets. For example, a highly-paid employee may not feel a significant impact on their cash in hand due to contributions, whereas a low-paid employee may be more concerned about meeting monthly expenses rather than future benefits. Worker satisfaction is a crucial consideration.
Industry Type and Labor Turnover
Another factor to consider is the type of industry you are in and the prevailing labor turnover. For instance, in a BPO with high labor turnover, opting for a lower basic amount could keep both employees and employers satisfied and potentially address attrition. Conversely, in traditional industries where employees tend to stay long-term, a higher basic amount may be more suitable.
Regards,
Manish
From India
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Salary Sheet & PF PT Calculation & Challan.xls