Dear All,
I have recently joined a manufacturing company as an HR Executive. This company is almost 50 yrs old. We are still following the conventional working style and old policies.
In the present salary structure of our company, Basic is 70-75 % of total Gross Sal. Apart from basic there are only 2 components i.e. HRA and Conveyance. Most of the employees specially those falling in higher salary bracket, where basic is almost 60 to 80 K , are really complaining and requesting to change this structure and make it more employee friendly so that they can save some tax amounts.
I would be really thankful to all of you if you can give your valuable inputs on this and suggest me a good salary structure which will be best for both the employees and employer.
Thanks
Preeti :)
From India, Mumbai
I have recently joined a manufacturing company as an HR Executive. This company is almost 50 yrs old. We are still following the conventional working style and old policies.
In the present salary structure of our company, Basic is 70-75 % of total Gross Sal. Apart from basic there are only 2 components i.e. HRA and Conveyance. Most of the employees specially those falling in higher salary bracket, where basic is almost 60 to 80 K , are really complaining and requesting to change this structure and make it more employee friendly so that they can save some tax amounts.
I would be really thankful to all of you if you can give your valuable inputs on this and suggest me a good salary structure which will be best for both the employees and employer.
Thanks
Preeti :)
From India, Mumbai
I am facing this issue too and thinking upon suggesting management to change the pay structure. 1 way is to name the allowances in such a way that they won't attract tax..for example Uniform Allowance ( Also appl for service ind ) - claimed against the tailor/clothes shoppin bills - is tax free upto certain extent
Once i initiate the work in this irection i'll kepp u all posted
Meanwhile i request other members to pitch in and advice us
warm regards
nikhil
From India, Mumbai
14Once i initiate the work in this irection i'll kepp u all posted
Meanwhile i request other members to pitch in and advice us
warm regards
nikhil
From India, Mumbai
Friend!
Well the you can break down the gross salary in following components:=
Basic
HRA
Conveyance(upto 800pm is tax free)
Medical reimbursment(Rs 1250pm is tax free)
All other reimbursments bears FBT(fringe benefit tax) which an employer has to pay.So you need to convince your manageent for this extra burden.
All other allownace also calls for tax...
You can introduce PF for your employees which would save tax.
Anu :D :D
From India, Calcutta
Well the you can break down the gross salary in following components:=
Basic
HRA
Conveyance(upto 800pm is tax free)
Medical reimbursment(Rs 1250pm is tax free)
All other reimbursments bears FBT(fringe benefit tax) which an employer has to pay.So you need to convince your manageent for this extra burden.
All other allownace also calls for tax...
You can introduce PF for your employees which would save tax.
Anu :D :D
From India, Calcutta
Thanks a lot. we have PF in our salary Structure. Request you to suggest me that whether the current sal structure is more employee friendly where basic is almost 75% of total Sal. Also let me know what are the benefits of having this type of structure.
Thanking you all for your support.
Regards,
Preeti
From India, Mumbai
Thanking you all for your support.
Regards,
Preeti
From India, Mumbai
Hi
Other than Basic and HRA, i think you can include Attire allowance, Uniform allowance, Books and periodicals, CCA, Medical reimbursement, Telephone reimbursement, LTA, Drivers Salary, Car rental Allowance etc in the salary break ups and thus save from the tax.
Regards,
Sinju
From India
Other than Basic and HRA, i think you can include Attire allowance, Uniform allowance, Books and periodicals, CCA, Medical reimbursement, Telephone reimbursement, LTA, Drivers Salary, Car rental Allowance etc in the salary break ups and thus save from the tax.
Regards,
Sinju
From India
Hi all
Well apart from conveyance and Medical you can have LTA in your salary break up which is twice in a block of four years tax exempted as per the Income Tax law for LTA.
Also you can give Sodexho lunch coupons everymonth which is tax exempted and can be used for grocery shopping and also in used in a lot of restaurants. earlier the limit was 1800 per month but i heard that now it has been made unlimited.
Hope this helps you all in designing the salary structure more employee friendly.
From Germany
Well apart from conveyance and Medical you can have LTA in your salary break up which is twice in a block of four years tax exempted as per the Income Tax law for LTA.
Also you can give Sodexho lunch coupons everymonth which is tax exempted and can be used for grocery shopping and also in used in a lot of restaurants. earlier the limit was 1800 per month but i heard that now it has been made unlimited.
Hope this helps you all in designing the salary structure more employee friendly.
From Germany
Hie,
One more suggestion, since all the fringe benefits carry tax liability towards the employer. You can suggest the management to reduce the basic amount and compensate the difference amount as 'special allowance' or 'executive allowance' , which will help the employer pay lesser amount for PF (employer contribution) which is 12% of basic.
Regards,
Parul
From India, Delhi
One more suggestion, since all the fringe benefits carry tax liability towards the employer. You can suggest the management to reduce the basic amount and compensate the difference amount as 'special allowance' or 'executive allowance' , which will help the employer pay lesser amount for PF (employer contribution) which is 12% of basic.
Regards,
Parul
From India, Delhi
Hi Parul,
I have one doubt. How does it affect the employer by reducing the basic pay? As employer's contribution to PF is a part of the CTC how does it matter whether the PF contribution is less or more?
Does it have an impact on the tax liability of the employer?
I would really appreciate if you could please clarify my doubt.
Regards
Simran
From Germany
I have one doubt. How does it affect the employer by reducing the basic pay? As employer's contribution to PF is a part of the CTC how does it matter whether the PF contribution is less or more?
Does it have an impact on the tax liability of the employer?
I would really appreciate if you could please clarify my doubt.
Regards
Simran
From Germany
Dear Simran,
All i mean is if we suggest the management to reduce the basic amount(as we can see that in thread starter's org. the basic constitutes 70-75% of the ctc, wch is not right) then the mgt can atleast save in the equal amount of employer's PF share, that it has to bear if it allows higher basic amounts to its staff. Instead the same amount can be allocated under diffrent heads.
If we see from the employee's end, he no doubt gets the tax benefit on the PF amount, but its kind of a forced savings, that fetches him 8% interst. wherein if he invests in mutual funds, bonds, it can pay him 15-20% return.
Thus, it might be beneficial to both the parties.
i hope i am able to clear what i meant.
Regards,
Parul
From India, Delhi
All i mean is if we suggest the management to reduce the basic amount(as we can see that in thread starter's org. the basic constitutes 70-75% of the ctc, wch is not right) then the mgt can atleast save in the equal amount of employer's PF share, that it has to bear if it allows higher basic amounts to its staff. Instead the same amount can be allocated under diffrent heads.
If we see from the employee's end, he no doubt gets the tax benefit on the PF amount, but its kind of a forced savings, that fetches him 8% interst. wherein if he invests in mutual funds, bonds, it can pay him 15-20% return.
Thus, it might be beneficial to both the parties.
i hope i am able to clear what i meant.
Regards,
Parul
From India, Delhi
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