How can we breakup the salary structure, what is the process and why we break it up?
From India, Delhi
2From India, Delhi
Hi Lavanya,
Salary break up is very essential element in the salary management.
Reason is behind of that through this individual can understand that what are basic parts of his/her monthly salary/remuneration. THis is also necessary due to tax determination on the salary.
Your second question is the process for the same. For that you have to reveal that for which position you are asking.
Waiting for your reply.
Rgds
From India, Mumbai
Salary break up is very essential element in the salary management.
Reason is behind of that through this individual can understand that what are basic parts of his/her monthly salary/remuneration. THis is also necessary due to tax determination on the salary.
Your second question is the process for the same. For that you have to reveal that for which position you are asking.
Waiting for your reply.
Rgds
From India, Mumbai
Dear Lavanya,
In order to give answer for your query you need to mention your company polices, since policies differs from companies to companies. To my knowledge for fixing salary there is no hard-and-fast rule, it determines according to companies policy.
In general practice, Company will not give any consolidated payment to their regular staff. Some times companies pays consolidated pay to some categories for example if they hire a person for temporary basis or if some body in probationary period until they get regularized of their service they may offer consolidate amount. In such cases companies may pays in consolidated amount.
If company appoint a person on consultancy basis they will not break up his or her salary merely pay consolidated amount and deduct Income Tax (TDS) as per Income tax norms.
Coming to your main query……. To my knowledge and in general practice to give breakup it all depends on company policies. The main object is to breakup salary to follow statutory obligations like P.F, Gratuity, P.T, ESI, income tax etc simultaneously employee’s will be benefited.
For example………
If company want to fix Rs. 30,000/- as a salary to x person. Merely they bifurcate this amount into various components. As Basic, HRA, Conveyance, Medical Allowance, Special Allowance, LTA, Children Education Allowance etc…
If they bifurcate it facilitate to determinate their P.F, ESI, P.T and Income Tax as per statutory norms.
Further I am giving small example for better understating.
If salary is Rs. 30,000/-
Can give Basic 50% of Salary it is Rs. 15,000/- (as I said Basic determinates according to company policy and it varies from company to company)
HRA (40% on Basic incase 50% in metropolitan cities
Conveyance Rs. 800/- it is fixed and the maximum will be allowed as per IT norms (in case handicapped Rs. 1600/- P.M)
Medical Allowance Rs. 1250/- P.M it is fixed and the maximum will be allowed as per IT norms (against submission of bills)
Children Education Allowance Rs. 100/-P.M for one kid (maximum two kids) it is fixed and the maximum will be allowed as per IT norms
LTA it gives for the purpose of tax saving .To get exemption one should comply the rules as per IT norms. It can be availed two times in block of four years against submission of original bills.
Balance amount to be transferred to special allowance which is fully taxable.
While fixing Basic salary company has to consider all statutory obligations since the majority compliances based on Basic salary like P.F, Gratuity, HRA etc.
I hope you get some idea with my aforesaid information.
If you want more information just use search button which is on the top of left side, I am sure you will get an adequate information in this regard.
I wish you all the best.
Regards,
TSK
From India, Hyderabad
In order to give answer for your query you need to mention your company polices, since policies differs from companies to companies. To my knowledge for fixing salary there is no hard-and-fast rule, it determines according to companies policy.
In general practice, Company will not give any consolidated payment to their regular staff. Some times companies pays consolidated pay to some categories for example if they hire a person for temporary basis or if some body in probationary period until they get regularized of their service they may offer consolidate amount. In such cases companies may pays in consolidated amount.
If company appoint a person on consultancy basis they will not break up his or her salary merely pay consolidated amount and deduct Income Tax (TDS) as per Income tax norms.
Coming to your main query……. To my knowledge and in general practice to give breakup it all depends on company policies. The main object is to breakup salary to follow statutory obligations like P.F, Gratuity, P.T, ESI, income tax etc simultaneously employee’s will be benefited.
For example………
If company want to fix Rs. 30,000/- as a salary to x person. Merely they bifurcate this amount into various components. As Basic, HRA, Conveyance, Medical Allowance, Special Allowance, LTA, Children Education Allowance etc…
If they bifurcate it facilitate to determinate their P.F, ESI, P.T and Income Tax as per statutory norms.
Further I am giving small example for better understating.
If salary is Rs. 30,000/-
Can give Basic 50% of Salary it is Rs. 15,000/- (as I said Basic determinates according to company policy and it varies from company to company)
HRA (40% on Basic incase 50% in metropolitan cities
Conveyance Rs. 800/- it is fixed and the maximum will be allowed as per IT norms (in case handicapped Rs. 1600/- P.M)
Medical Allowance Rs. 1250/- P.M it is fixed and the maximum will be allowed as per IT norms (against submission of bills)
Children Education Allowance Rs. 100/-P.M for one kid (maximum two kids) it is fixed and the maximum will be allowed as per IT norms
LTA it gives for the purpose of tax saving .To get exemption one should comply the rules as per IT norms. It can be availed two times in block of four years against submission of original bills.
Balance amount to be transferred to special allowance which is fully taxable.
While fixing Basic salary company has to consider all statutory obligations since the majority compliances based on Basic salary like P.F, Gratuity, HRA etc.
I hope you get some idea with my aforesaid information.
If you want more information just use search button which is on the top of left side, I am sure you will get an adequate information in this regard.
I wish you all the best.
Regards,
TSK
From India, Hyderabad
Hello,
Thanks for your adequate answer in reply, one more question I want to know, why we break it up? Why cant we give salary without break up? How we calculate basic salary in CTC? I am into recruitment and now want to move into payroll department, so what knowledge should I gain.Waiting for reply.......
Regards
Lavanya
From India, Delhi
Thanks for your adequate answer in reply, one more question I want to know, why we break it up? Why cant we give salary without break up? How we calculate basic salary in CTC? I am into recruitment and now want to move into payroll department, so what knowledge should I gain.Waiting for reply.......
Regards
Lavanya
From India, Delhi
Hi Lavanya,
We provide the practical core hr training into,
-Payroll Administration (making the salary break-up, Forms filling by manual & Software)
-Recruitment & Selection (Handling job portal, screening etc.)
-HR Generalist (By case study)
-Statutory acts & Legal Compliances (Forma filling)
This training is available only in Mumbai & Pune.
I enclosed the training content with attachment, please find it.
For more details you can make a visit with us at Official Website of Premier Academy of HR Professionals
or
Make a call us on-9860422727
Thanks & Regards,
Monali
From India, Pune
We provide the practical core hr training into,
-Payroll Administration (making the salary break-up, Forms filling by manual & Software)
-Recruitment & Selection (Handling job portal, screening etc.)
-HR Generalist (By case study)
-Statutory acts & Legal Compliances (Forma filling)
This training is available only in Mumbai & Pune.
I enclosed the training content with attachment, please find it.
For more details you can make a visit with us at Official Website of Premier Academy of HR Professionals
or
Make a call us on-9860422727
Thanks & Regards,
Monali
From India, Pune
Dear Lavanya,
I have already explained you why salary has to break up into various parts. As we all are working in professional organisations merely we can not make the payment just like lumsum amount, without any breakups. As we need to comply statutory obligations, we need to bifurcate the payment into various parts.
For determining basic salary as I said in my earlier post there is no hard and fast rule, merely fixes as per company policies. These polices varies from company to company. In general Practice Company fixes 40% to 50% as basic out of his/her total salary. As you want to move payroll department my suggestion is go through your company policies and see what are the parameters they are considering while fixing basic. They might have issued appointment letters to employees who are already working as a regular staff, refer all those appointment copies. Ask your queries to seniors about the same, I hope you will get appropriate information.
To my knowledge you need to know all statutory compliances pertains to employee’s benefits and compensations as per various acts.( Like P.F, ESI , Minimum wages, Gratuity act etc.. and many more.
At last just use search button there are many similar kind of question which were raised earlier in this forum. Our seniors and experts have given their view and appropriate answers. Just do the same at your convenience time you will get bunch of information. Do read more articles about recruitment process and HR related stuff either from this cite hr site or Google, I am sure you will gain more knowledge.
I wish you all the best.
From India, Hyderabad
I have already explained you why salary has to break up into various parts. As we all are working in professional organisations merely we can not make the payment just like lumsum amount, without any breakups. As we need to comply statutory obligations, we need to bifurcate the payment into various parts.
For determining basic salary as I said in my earlier post there is no hard and fast rule, merely fixes as per company policies. These polices varies from company to company. In general Practice Company fixes 40% to 50% as basic out of his/her total salary. As you want to move payroll department my suggestion is go through your company policies and see what are the parameters they are considering while fixing basic. They might have issued appointment letters to employees who are already working as a regular staff, refer all those appointment copies. Ask your queries to seniors about the same, I hope you will get appropriate information.
To my knowledge you need to know all statutory compliances pertains to employee’s benefits and compensations as per various acts.( Like P.F, ESI , Minimum wages, Gratuity act etc.. and many more.
At last just use search button there are many similar kind of question which were raised earlier in this forum. Our seniors and experts have given their view and appropriate answers. Just do the same at your convenience time you will get bunch of information. Do read more articles about recruitment process and HR related stuff either from this cite hr site or Google, I am sure you will gain more knowledge.
I wish you all the best.
From India, Hyderabad
Hello, Thank you very much for giving me this much knowledge and quench my thirst. If I will have any question further I’ll get back with my questions. Thanks Lavanya
From India, Delhi
From India, Delhi
Hello,
This is with reference to the Consolidated Pay. I am working in an organisation where the salary is paid as Consolidated only without any break up i.e. for Ex. a Professor is being paid a consolidated pay of Rs.60,000/- p.m. without any break up and Professional Tax & IT is deducted. My doubt is on such a consolidated pay whether Gratuity is applicable if so how is it calculated. kindly mail me urgently.
Thanks with regards.
JAVEED AKBER
From India, Hyderabad
This is with reference to the Consolidated Pay. I am working in an organisation where the salary is paid as Consolidated only without any break up i.e. for Ex. a Professor is being paid a consolidated pay of Rs.60,000/- p.m. without any break up and Professional Tax & IT is deducted. My doubt is on such a consolidated pay whether Gratuity is applicable if so how is it calculated. kindly mail me urgently.
Thanks with regards.
JAVEED AKBER
From India, Hyderabad
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Typical salary breakup.jpg
Salary breakup.xls
Salary Breakup Annexure.doc