Please suggest a breakup for CTC offered at 2.4 lacs. We are a startup. Also, please suggest if we hire someone whose PF was deducted in previous employment, do we have to deduct it as well as per the law, or do we not have to until we reach an employee strength of 20 employees? In that case, what would be the breakup of the salary? Please let me know the breakup with and without PF contribution. Also, what are the must-have components? Do we need to make any other deductions?
Location: Gurgaon, India
From India, Gurgaon
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Location: Gurgaon, India
From India, Gurgaon
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To effectively structure the salary breakup for a CTC of 2.4 lakhs, considering the location as Gurgaon, India, and addressing the query regarding PF deductions for employees from previous employment, here are the recommendations:
Breakup of Salary Components:
Without PF Contribution:
- Basic Salary: 40-50% of CTC (Rs. 96,000 - Rs. 1,20,000)
- House Rent Allowance (HRA): 40-50% of Basic Salary (Rs. 38,400 - Rs. 60,000)
- Special Allowance: Remaining CTC amount after Basic and HRA (Rs. 48,000 - Rs. 72,000)
- Other Allowances: Medical Allowance, Conveyance Allowance, etc.
Must-have Components:
1. Basic Salary: Considered for provident fund (PF) contributions.
2. House Rent Allowance (HRA): Exempted from taxes subject to specified conditions.
3. Special Allowance: Flexible component for salary structuring.
With PF Contribution:
- Basic Salary: 40% of CTC (Rs. 96,000)
- Employer's PF Contribution: 3.67% of Basic Salary (Rs. 3,532.80)
- Employee's PF Contribution: 12% of Basic Salary (Rs. 11,520)
Regarding PF Deductions:
- As per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, if the organization has fewer than 20 employees, PF deduction is not mandatory for employees already contributing in previous employments.
- However, once the employee strength reaches 20 or more, PF deductions become applicable for all employees.
Additional Deductions:
- Professional Tax (if applicable in Gurgaon, India).
- TDS (Tax Deducted at Source) as per income tax slabs.
It is essential to adhere to the applicable labor laws and tax regulations while structuring salaries and deductions for employees to ensure compliance and maintain a transparent and efficient payroll system.
From India, Gurugram
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51Breakup of Salary Components:
Without PF Contribution:
- Basic Salary: 40-50% of CTC (Rs. 96,000 - Rs. 1,20,000)
- House Rent Allowance (HRA): 40-50% of Basic Salary (Rs. 38,400 - Rs. 60,000)
- Special Allowance: Remaining CTC amount after Basic and HRA (Rs. 48,000 - Rs. 72,000)
- Other Allowances: Medical Allowance, Conveyance Allowance, etc.
Must-have Components:
1. Basic Salary: Considered for provident fund (PF) contributions.
2. House Rent Allowance (HRA): Exempted from taxes subject to specified conditions.
3. Special Allowance: Flexible component for salary structuring.
With PF Contribution:
- Basic Salary: 40% of CTC (Rs. 96,000)
- Employer's PF Contribution: 3.67% of Basic Salary (Rs. 3,532.80)
- Employee's PF Contribution: 12% of Basic Salary (Rs. 11,520)
Regarding PF Deductions:
- As per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, if the organization has fewer than 20 employees, PF deduction is not mandatory for employees already contributing in previous employments.
- However, once the employee strength reaches 20 or more, PF deductions become applicable for all employees.
Additional Deductions:
- Professional Tax (if applicable in Gurgaon, India).
- TDS (Tax Deducted at Source) as per income tax slabs.
It is essential to adhere to the applicable labor laws and tax regulations while structuring salaries and deductions for employees to ensure compliance and maintain a transparent and efficient payroll system.
From India, Gurugram
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Salary breakup format.xls