Hi,
We want to revise pay structure of our seniors
We already have basic componants like LTA, mediclaim & their monthly & annual reuim.
Can any one help me for newly added componants & their correct percentage to the CTC..
Please it will be a great help for me. I am getting opportunity to change many more old systems in my current org.
Thank you.
From India, Mumbai
We want to revise pay structure of our seniors
We already have basic componants like LTA, mediclaim & their monthly & annual reuim.
Can any one help me for newly added componants & their correct percentage to the CTC..
Please it will be a great help for me. I am getting opportunity to change many more old systems in my current org.
Thank you.
From India, Mumbai
For Senior Management Employees only
PERQUISITES GUIDELINES AMOUNT (Per Year)
Rent Free Accommodation
Owned or Managed by the Employer -
(Includes Flat, Hotel, Farmhouse, Guest House, Caravan, etc.) Income Tax effect:
Taxable perquisite – Value of rent free accommodation considered taxable for the period of house occupied is either of the following:
For Private Sector Employees
10% of Salary (for metro cities) or (7.5% for non metro cities) + Excess of Fair Rent Value (market rent) over 60% of salary (i.e. Market Rent – 60% of salary) = Total taxable value of rent-free acco.
For PSU and Semi-Govt. employees
10% of Salary (for metro cities) or (7.5% for non metro cities) OR Fair Rent Value whichever is lower is Taxable.
The term ‘Salary’ will include total of the following:
Basic, All Allowances & Reimbursements (excluding Med. Reimb.), Bonus received, any commission, fees etc.
Fair Rent – Market Rent or Municipal Valuation of Rent, whichever is Higher.
Car
(For personal)
Owned by the Employer Income Tax effect:
Taxable Value will include the following –
Actual Running & Maintenance expenditure incurred by the employer + Driver’s Salary + Depreciation – any amount charged by employer to employee for personal use of the car.
Employee Stock Option Plan Employee exercises his option by buying out the shares during the exercise period however tax liability occurs only when an employee sells the shares on the value of sale made under the Capital Gains head of income.
OTHER BENEFITS OUT OF CTC STRUCTURE BUT STILL FORM PART OF COMPENSATION
Insurance Schemes – employees can be covered under following two schemes. The policy covers may be kept between the range of Rs.100000 to Rs.500000/- depending upon the hierarchies or grade system in your company.
• Personal Accident Insurance Scheme (for employee only)
• Medical Insurance Scheme (For employee & dependents which can be spouse, first two children, parents or in-laws (either of them) etc. Some companies do not cover parents/in laws, some insurance companies do. Please check this with them before taking a cover for your employees.
• Maternity Benefits – Some companies have their own maternity benefit schemes for their female employees and some companies don’t have, rather the depend on Maternity Benefit Act provisions. However it is not necessary, you can choose either of the one approach. Having companies own scheme helps a lot because under the Act govt. procedures to claim benefits are always tedious one.
VARIABLE PAY / PERFORMANCE PAY / Incentives etc
This is not a salary. The objective of this is purely different than salary i.e. you perform; we pay you accordingly. Whereas objective of Salary is to ‘Regularly’ compensate an employee with a ‘Regular’ figure against the services extended by him towards the organization. Hence there is no Performance consideration in Salary or CTC, so there is no logic to include this in CTC structure. VP is purely performance driven and is not regular or fixed amount. Hence it should always be kept out of main Salary Structure. Although most of the companies prefer to include this figure in CTC however it gives vague and unrealistic impression of Salary. Because individual’s expectations from Salary as terminology differs than Incentives/ Variables etc
Rather an independent and attractive Variable Pay or Incentive Structure can be designed and should be a part of Rewards & Awards Strategy of the organization.
Following parameters can be kept in mind.
It can be Random figures with broad ranges depending on the Position, Grade, Designation of the employees. For example if a company has Grades A, B, C, D, E, F then we can design incentive ranges like for Grade A, Incentives can be within the range of 0 to 100000, where Rs.0 is for poor and negative performance and 100000 is for Outstanding performers. Similarly employees falling in between can be given %ages of this range. For example after Poor ratings, you can have Average or Good or Excellent Rated employees. For them guidelines could be; this year average employees would get 30%-50% (i.e. Rs.30000/- to 50000/-) Good employees can be given between 50% to 70% (i.e. Rs.50000/- to Rs.70000/- and Excellent Rated employees can be given between 70-90% (i.e. Rs.70000 to Rs.90000/-) etc.
Another approach can be percentage of CTC can be given as Incentives. It can be 10%, 20% or 30% of Monthly Salary or Basic + Allowances as the case may be. For example if you decide to keep 30% of Basic + Allowances as Variable Pay or Performance Incentives, you can further define eligibility on the basis of performance ratings as follows. If someone’s CTC is Rs.500000/- and his Basic + Allowances comes to 375000 then his eligibility for incentives comes out to be 30%x375000=112500 i.e. the 100 % incentives for Outstanding performance. However if he performs at ‘Good’ Rating, he may be given say anywhere between 50-70% of 112500 as incentives.
for more details you can get in touch
Regards
DEV
From India, Mumbai
13PERQUISITES GUIDELINES AMOUNT (Per Year)
Rent Free Accommodation
Owned or Managed by the Employer -
(Includes Flat, Hotel, Farmhouse, Guest House, Caravan, etc.) Income Tax effect:
Taxable perquisite – Value of rent free accommodation considered taxable for the period of house occupied is either of the following:
For Private Sector Employees
10% of Salary (for metro cities) or (7.5% for non metro cities) + Excess of Fair Rent Value (market rent) over 60% of salary (i.e. Market Rent – 60% of salary) = Total taxable value of rent-free acco.
For PSU and Semi-Govt. employees
10% of Salary (for metro cities) or (7.5% for non metro cities) OR Fair Rent Value whichever is lower is Taxable.
The term ‘Salary’ will include total of the following:
Basic, All Allowances & Reimbursements (excluding Med. Reimb.), Bonus received, any commission, fees etc.
Fair Rent – Market Rent or Municipal Valuation of Rent, whichever is Higher.
Car
(For personal)
Owned by the Employer Income Tax effect:
Taxable Value will include the following –
Actual Running & Maintenance expenditure incurred by the employer + Driver’s Salary + Depreciation – any amount charged by employer to employee for personal use of the car.
Employee Stock Option Plan Employee exercises his option by buying out the shares during the exercise period however tax liability occurs only when an employee sells the shares on the value of sale made under the Capital Gains head of income.
OTHER BENEFITS OUT OF CTC STRUCTURE BUT STILL FORM PART OF COMPENSATION
Insurance Schemes – employees can be covered under following two schemes. The policy covers may be kept between the range of Rs.100000 to Rs.500000/- depending upon the hierarchies or grade system in your company.
• Personal Accident Insurance Scheme (for employee only)
• Medical Insurance Scheme (For employee & dependents which can be spouse, first two children, parents or in-laws (either of them) etc. Some companies do not cover parents/in laws, some insurance companies do. Please check this with them before taking a cover for your employees.
• Maternity Benefits – Some companies have their own maternity benefit schemes for their female employees and some companies don’t have, rather the depend on Maternity Benefit Act provisions. However it is not necessary, you can choose either of the one approach. Having companies own scheme helps a lot because under the Act govt. procedures to claim benefits are always tedious one.
VARIABLE PAY / PERFORMANCE PAY / Incentives etc
This is not a salary. The objective of this is purely different than salary i.e. you perform; we pay you accordingly. Whereas objective of Salary is to ‘Regularly’ compensate an employee with a ‘Regular’ figure against the services extended by him towards the organization. Hence there is no Performance consideration in Salary or CTC, so there is no logic to include this in CTC structure. VP is purely performance driven and is not regular or fixed amount. Hence it should always be kept out of main Salary Structure. Although most of the companies prefer to include this figure in CTC however it gives vague and unrealistic impression of Salary. Because individual’s expectations from Salary as terminology differs than Incentives/ Variables etc
Rather an independent and attractive Variable Pay or Incentive Structure can be designed and should be a part of Rewards & Awards Strategy of the organization.
Following parameters can be kept in mind.
It can be Random figures with broad ranges depending on the Position, Grade, Designation of the employees. For example if a company has Grades A, B, C, D, E, F then we can design incentive ranges like for Grade A, Incentives can be within the range of 0 to 100000, where Rs.0 is for poor and negative performance and 100000 is for Outstanding performers. Similarly employees falling in between can be given %ages of this range. For example after Poor ratings, you can have Average or Good or Excellent Rated employees. For them guidelines could be; this year average employees would get 30%-50% (i.e. Rs.30000/- to 50000/-) Good employees can be given between 50% to 70% (i.e. Rs.50000/- to Rs.70000/- and Excellent Rated employees can be given between 70-90% (i.e. Rs.70000 to Rs.90000/-) etc.
Another approach can be percentage of CTC can be given as Incentives. It can be 10%, 20% or 30% of Monthly Salary or Basic + Allowances as the case may be. For example if you decide to keep 30% of Basic + Allowances as Variable Pay or Performance Incentives, you can further define eligibility on the basis of performance ratings as follows. If someone’s CTC is Rs.500000/- and his Basic + Allowances comes to 375000 then his eligibility for incentives comes out to be 30%x375000=112500 i.e. the 100 % incentives for Outstanding performance. However if he performs at ‘Good’ Rating, he may be given say anywhere between 50-70% of 112500 as incentives.
for more details you can get in touch
Regards
DEV
From India, Mumbai
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