Please advise...
we at present have our salary structure bifurcated into basic, transport and HRA. Now we want to restructure it and introduce allowances like special allowance, city allowance etc. so as to control the employer's liability (PF contribution, encashment of leaves, gratuity)which is directly effected by basic salary.
My querry is that for people whose present basic salary is more than 6500/- p.m. will it attract any legal implication if their basic salary gets reduced. Eg. Suppose present salary is 10000 basic+ 2000 HRA n we restructure it as 8000 basic+ 2000 HRA+ 2000 SPECIAL ALLOWANCE will it attract any legal complication as we are reducing the basic salary component? Note that we have a cieling limit for PF contribution as 6500/- p.m.
Please clarify
Rolly
From India, New Delhi
8we at present have our salary structure bifurcated into basic, transport and HRA. Now we want to restructure it and introduce allowances like special allowance, city allowance etc. so as to control the employer's liability (PF contribution, encashment of leaves, gratuity)which is directly effected by basic salary.
My querry is that for people whose present basic salary is more than 6500/- p.m. will it attract any legal implication if their basic salary gets reduced. Eg. Suppose present salary is 10000 basic+ 2000 HRA n we restructure it as 8000 basic+ 2000 HRA+ 2000 SPECIAL ALLOWANCE will it attract any legal complication as we are reducing the basic salary component? Note that we have a cieling limit for PF contribution as 6500/- p.m.
Please clarify
Rolly
From India, New Delhi
Basic....
HRA - 30 % of Basic (Non Taxable on Producing HRA Receipt)
CCA - 40% of Basic (Taxable)
Medical - 15000/12 (Will be Non taxable)
Telephone - Can be Basic / 12 (On Producing Bills can be non taxable but compnay will ahve to pay FBT)
Books and Periodicals - (Taxable)
Special HRA (Taxable)
Food Allownace / Coupons: 1250 (Non Taxable)
Special Allowance (Can keep it Flexible for offer Negotiation and will be taxable)
LTA: One month Basic
Bonus / X-Gratia: One month Basic
Company can also provide loan on lesser intrest, and the intrest benifit can also be the cost of the CTC.
Please do let me know for more clerification.
Gunjan
From India, Vadodara
HRA - 30 % of Basic (Non Taxable on Producing HRA Receipt)
CCA - 40% of Basic (Taxable)
Medical - 15000/12 (Will be Non taxable)
Telephone - Can be Basic / 12 (On Producing Bills can be non taxable but compnay will ahve to pay FBT)
Books and Periodicals - (Taxable)
Special HRA (Taxable)
Food Allownace / Coupons: 1250 (Non Taxable)
Special Allowance (Can keep it Flexible for offer Negotiation and will be taxable)
LTA: One month Basic
Bonus / X-Gratia: One month Basic
Company can also provide loan on lesser intrest, and the intrest benifit can also be the cost of the CTC.
Please do let me know for more clerification.
Gunjan
From India, Vadodara
Dear Friend You can reduce your basic. Like introudcing points like Basic HRA Conveyance Special allowance (company’s allowance) COLA Shaving allowance’s etc...............
From India, Mumbai
From India, Mumbai
Dear Jaya Are you very sure that reducing the basic does not attract any legal implication as other benefits also get effected...
From India, New Delhi
From India, New Delhi
Hi!
Why are you restructing the basic also. If an employee is getting a basic of 10000 p.m (Basic is a very imp. everything depends on the basic like Allowances, HRA, PF, Gratuity etc..). So if you have to restructure do it on allowances.
Do you have C&B manager in ur org? check with him or any finance person.
From India, Kalyan
Why are you restructing the basic also. If an employee is getting a basic of 10000 p.m (Basic is a very imp. everything depends on the basic like Allowances, HRA, PF, Gratuity etc..). So if you have to restructure do it on allowances.
Do you have C&B manager in ur org? check with him or any finance person.
From India, Kalyan
HI...
well why we need to restructure basic is because since beginning we have just basic n HRA as cmponents so employees who are older are having basic to the tune of say 25K TO 30K a month. There is no issue of PF as we have a cieling of 6500/- but our liabilities as an employer are high wen it comes to gratuity, bonus, leave encashment etc. coz of high basic salary.
So we thought of reducing basic salary for such employees and thats why wanna knw whether its legal or no.
rolly
From India, New Delhi
well why we need to restructure basic is because since beginning we have just basic n HRA as cmponents so employees who are older are having basic to the tune of say 25K TO 30K a month. There is no issue of PF as we have a cieling of 6500/- but our liabilities as an employer are high wen it comes to gratuity, bonus, leave encashment etc. coz of high basic salary.
So we thought of reducing basic salary for such employees and thats why wanna knw whether its legal or no.
rolly
From India, New Delhi
You should not reduce the basic salary. Please see the EPF act section 12. Regards, Pradipta
From India
From India
hi pradipta
well we will not reduce the basic salary for employees getting less than 6500/- basic. We are thinking to reduce basic of employees who are not covered by PF as their basic is more than 6500/-/
rolly
From India, New Delhi
well we will not reduce the basic salary for employees getting less than 6500/- basic. We are thinking to reduce basic of employees who are not covered by PF as their basic is more than 6500/-/
rolly
From India, New Delhi
Hi rolly,
As far as I know there should not be any complications for the restructuring of Basic Salary of employees whose PF is not deducted.
The only thing you have to consider or look into the Income Tax Act part which says that Basic should be 60% of gross salary and all the other allowances depends on the basic.
So you can go ahead and you can restructure the same. You can also consult some Accounts people for giving maximum benefits to employees regarding saving the TDS.
Thanks
Aditya Gupta
From India, Delhi
As far as I know there should not be any complications for the restructuring of Basic Salary of employees whose PF is not deducted.
The only thing you have to consider or look into the Income Tax Act part which says that Basic should be 60% of gross salary and all the other allowances depends on the basic.
So you can go ahead and you can restructure the same. You can also consult some Accounts people for giving maximum benefits to employees regarding saving the TDS.
Thanks
Aditya Gupta
From India, Delhi
dear rolly,
you can reduced the basic,coz according to the act basic should not be less than 35% of the gross salary. beyond this, its management's decision to decide the % of basic according themselves.
well, if you reduce basic..........companmy liability will reduce towards employer Pf as well as employee will get more in hand salary coz employee pf ,esi and EPS will be also reduced respectively.
still any query free to ask
deepika(HR Manager)
From India, New Delhi
you can reduced the basic,coz according to the act basic should not be less than 35% of the gross salary. beyond this, its management's decision to decide the % of basic according themselves.
well, if you reduce basic..........companmy liability will reduce towards employer Pf as well as employee will get more in hand salary coz employee pf ,esi and EPS will be also reduced respectively.
still any query free to ask
deepika(HR Manager)
From India, New Delhi
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