I have been surfing to get exact point wise components of CTC structure which has FIXED &VARIABLE points included.
Tax benefit to be considered.
What is the correct calculation for increments in salary structure?
I am waiting for clarity as there is lot of confusion:)
From India, Delhi
Tax benefit to be considered.
What is the correct calculation for increments in salary structure?
I am waiting for clarity as there is lot of confusion:)
From India, Delhi
Dear Member,
There can be many components in a CTC structure. That all depends for whom you are drafting the structure. Every point can't be considered for all levels.
In case of lower salary (upto 5 L), you need to frame the structure keeping in view the basic structure (statutory wages, bonus, PF-ESI etc.)
In case of medium salary (5L to 10 L), you need to frame the structure keeping in view the basic structure and enhanced tax exemptions (LTA, Telephone, newspaper etc. re-imbursement).
In case of high salary (10 L & above), you need to frame the structure keeping in view the structure as per corporate norms and enhanced tax exemptions (LTA, Telephone, newspaper, vehicle fuel, vehicle maintenance etc. re-imbursement).
I have updated the most required components in the attached format.
Hope you will find as per requirement.
Learned members can put more light on the matter.
From India, Delhi
223There can be many components in a CTC structure. That all depends for whom you are drafting the structure. Every point can't be considered for all levels.
In case of lower salary (upto 5 L), you need to frame the structure keeping in view the basic structure (statutory wages, bonus, PF-ESI etc.)
In case of medium salary (5L to 10 L), you need to frame the structure keeping in view the basic structure and enhanced tax exemptions (LTA, Telephone, newspaper etc. re-imbursement).
In case of high salary (10 L & above), you need to frame the structure keeping in view the structure as per corporate norms and enhanced tax exemptions (LTA, Telephone, newspaper, vehicle fuel, vehicle maintenance etc. re-imbursement).
I have updated the most required components in the attached format.
Hope you will find as per requirement.
Learned members can put more light on the matter.
From India, Delhi
Dear Member, Total PF contribution is 25.15% but in CTC letter we add only 12%+12%,Please clarify.
From India, Chennai
From India, Chennai
Good evening & thank you Mr Singh for your prompt reply.
It would be really nice if I could use some valuable inputs on my queries mentioned below-
FYI,I belong to a small proprietorship organization of 14 people (we do not have any HR person).
Only 1 person is in 5 lakh ctc & 1 person in 7 lakh Ctc scale. Rest are between 2.5-3.5 lakh scale. We have had increments this year for some for both categories.
As per delhi min wage act 2018- we also follow pf & esi.-what should be the basic and other components for a person earning 20k,25k,28k per month if the increments are decided on CTC figure??
If the ctc is 26000 then the basic calculation of 40% is 10400. what should be the rest of components to fill the remaining amount?
Also if a person is earning 45000, then basic would be 18000. In this case what would be the break-up?
Also I cannot open the attachment. [please be kind enough to mention how i can do it]
Thank you and waiting eagerly for response on my query!!
From India, Delhi
It would be really nice if I could use some valuable inputs on my queries mentioned below-
FYI,I belong to a small proprietorship organization of 14 people (we do not have any HR person).
Only 1 person is in 5 lakh ctc & 1 person in 7 lakh Ctc scale. Rest are between 2.5-3.5 lakh scale. We have had increments this year for some for both categories.
As per delhi min wage act 2018- we also follow pf & esi.-what should be the basic and other components for a person earning 20k,25k,28k per month if the increments are decided on CTC figure??
If the ctc is 26000 then the basic calculation of 40% is 10400. what should be the rest of components to fill the remaining amount?
Also if a person is earning 45000, then basic would be 18000. In this case what would be the break-up?
Also I cannot open the attachment. [please be kind enough to mention how i can do it]
Thank you and waiting eagerly for response on my query!!
From India, Delhi
Dear member,
First of all, pls be noted the CTC structure depends upon many factors (company budget, future plans, nature of employees engaged, no. of employees, organisation structure etc). As you have mentioned yours is a small proprietorship organization of 14 people. Pls note my clarifications on your queries:-
In r/o employees of 5L-7L, you can consider the basic salary on basis of 40%-50% criteria. The other component could be HRA, 50% of basic (to avail tax benefits), special allowance, conveyance allowance etc. (provided in the attachment as well).
Pls find attached the notification of Delhi Govt in which Minimum Wages of different categories given.
As per Delhi Min. Wage Act Apr. 2018- we also follow pf & esi.-what should be the basic and other components for a person earning 20k, 25k, 28k per month if the increments are decided on CTC figure?? =THE BASIC MUST BE AS PER MW ACT, REST COMPONENTS COULD BE AS PER MY CTC ATTACHMENT.
If the ctc is 26000 then the basic calculation of 40% is 10400. what should be the rest of components to fill the remaining amount? = THIS IS INCORRECT WAY. FIRST CHECK WITH THE NOTIFICATION, THAN DEFINE THE BASIC.
The other component could be HRA (50% of basic) to avail tax benefits, special allowance, conveyance allowance etc. (provided in the attachment as well).
Also if a person is earning 45000, then basic would be 18000. In this case what would be the break-up? = THE BASIC FOR GRADUATE AND ABOVE IS RS. 18332/-. SO CHECK THE BASIC.
If you are unable to open the file, this may be due to you are using older version of excel. I am attaching as PDF, hope it will help you.
I have elaborate the matter in much detail, hope this will clarify you all the points. The attachment alone will not serve the purpose, you have to do working as per your requirement.
Last but not the least, I would advise you to take any consultant’s help. So that all time you can comply as per the govt. rules and regulations.
From India, Delhi
First of all, pls be noted the CTC structure depends upon many factors (company budget, future plans, nature of employees engaged, no. of employees, organisation structure etc). As you have mentioned yours is a small proprietorship organization of 14 people. Pls note my clarifications on your queries:-
In r/o employees of 5L-7L, you can consider the basic salary on basis of 40%-50% criteria. The other component could be HRA, 50% of basic (to avail tax benefits), special allowance, conveyance allowance etc. (provided in the attachment as well).
Pls find attached the notification of Delhi Govt in which Minimum Wages of different categories given.
As per Delhi Min. Wage Act Apr. 2018- we also follow pf & esi.-what should be the basic and other components for a person earning 20k, 25k, 28k per month if the increments are decided on CTC figure?? =THE BASIC MUST BE AS PER MW ACT, REST COMPONENTS COULD BE AS PER MY CTC ATTACHMENT.
If the ctc is 26000 then the basic calculation of 40% is 10400. what should be the rest of components to fill the remaining amount? = THIS IS INCORRECT WAY. FIRST CHECK WITH THE NOTIFICATION, THAN DEFINE THE BASIC.
The other component could be HRA (50% of basic) to avail tax benefits, special allowance, conveyance allowance etc. (provided in the attachment as well).
Also if a person is earning 45000, then basic would be 18000. In this case what would be the break-up? = THE BASIC FOR GRADUATE AND ABOVE IS RS. 18332/-. SO CHECK THE BASIC.
If you are unable to open the file, this may be due to you are using older version of excel. I am attaching as PDF, hope it will help you.
I have elaborate the matter in much detail, hope this will clarify you all the points. The attachment alone will not serve the purpose, you have to do working as per your requirement.
Last but not the least, I would advise you to take any consultant’s help. So that all time you can comply as per the govt. rules and regulations.
From India, Delhi
Dear Mr Singh,
Thank you for the information.In one of the attached sheet the basic is less in 20k salary sheet, which is again very confusing??
Kindly advise the right practice for INCREMENT for a small company like ours ??
We do wish to have a consultant but right now it is not possible for us.
I have joined Citehr family because it is full of experienced ,genuine people who can guide well & in turn share their knowledge.
Thank you again for your guidance and waiting for my answers!
From India, Delhi
Thank you for the information.In one of the attached sheet the basic is less in 20k salary sheet, which is again very confusing??
Kindly advise the right practice for INCREMENT for a small company like ours ??
We do wish to have a consultant but right now it is not possible for us.
I have joined Citehr family because it is full of experienced ,genuine people who can guide well & in turn share their knowledge.
Thank you again for your guidance and waiting for my answers!
From India, Delhi
Dear Member,
I think you are totally new in framing the CTC or even fresher in HR.
I don't think there should be any confusion. The basic is less than 20 K coz it is framed for lower scale employee (being CTC 20k/pm). You can increase (modify) the basic and other components as per your requirement.
You are facing difficulty bcoz you are unable to open the file. I am again attaching the file, if you will be able to download than all your queries will be resolved.
If you have any specific query, please share the same. First put some efforts to understand the structure and the basic principal of defining salary structure. Than start working at your own, you will definitely find the correct way.
However, framing the right practice of doing increment is mainly depends upon management overview regarding the budget, future plans, company profitability etc. You first draft proper salary structure, than while doing the increment ask your management (which generally is the owner in small company) what % should be given to the employees. Accordingly you can increase the Basic, HRA and other components.
Also note don't need to consider all components for every employee. Select some basic points (Basic salary, HRA, Conveyance etc) for every employee and pick the other heads as per employee designation and CTC.
Hope I am cleared to you, fellow members can put more light on the matter.
From India, Delhi
I think you are totally new in framing the CTC or even fresher in HR.
I don't think there should be any confusion. The basic is less than 20 K coz it is framed for lower scale employee (being CTC 20k/pm). You can increase (modify) the basic and other components as per your requirement.
You are facing difficulty bcoz you are unable to open the file. I am again attaching the file, if you will be able to download than all your queries will be resolved.
If you have any specific query, please share the same. First put some efforts to understand the structure and the basic principal of defining salary structure. Than start working at your own, you will definitely find the correct way.
However, framing the right practice of doing increment is mainly depends upon management overview regarding the budget, future plans, company profitability etc. You first draft proper salary structure, than while doing the increment ask your management (which generally is the owner in small company) what % should be given to the employees. Accordingly you can increase the Basic, HRA and other components.
Also note don't need to consider all components for every employee. Select some basic points (Basic salary, HRA, Conveyance etc) for every employee and pick the other heads as per employee designation and CTC.
Hope I am cleared to you, fellow members can put more light on the matter.
From India, Delhi
Dear Sir,
Thank you for your prompt answer. You have guessed it right, I am very new to this subject and my concerns are because I am the
co-proprietor of the company. We believe in doing the right thing & right process. So before initializing we just wanted to be sure if our calculations are right. Below I have shared one example of store assistant who is unskilled and 5 months old with the company under training period. please share some light on format. Thank you in advance!
Earnings Amount Deductions Amount
Basic 13350 TDS Payable - Salary (192B) 0
H.R.A 0 Employee's P.F Contribution@12% 1602
Children Education Allowance 0 Employee's E.S.I Contribution@1.75% 234
Transport Allowance 0
Medical Reimbusment 0
Leave Travel Allowance 0
Helper 0
Uniform Allowance 0
Uniform Upkeep Allowance 0
Compensatory Allowance 0
Salary (A) 13350 Total Deductions 1836
Net Monthly Salary 11514 Gross Salary 13350
Cost To Company Per Month Per Annum
PF : Employer Contribution & Charges 1756 21066
ESIC : Emp Contribution 634 7610
Gratuity 642 7702
Medical Insurance 0 0
Accidental Insurance 34 405
Leave Encashment 556 6675 15 PL/yr
Total (C) 3621 22391
CTC 16971 203658
From India, Delhi
Thank you for your prompt answer. You have guessed it right, I am very new to this subject and my concerns are because I am the
co-proprietor of the company. We believe in doing the right thing & right process. So before initializing we just wanted to be sure if our calculations are right. Below I have shared one example of store assistant who is unskilled and 5 months old with the company under training period. please share some light on format. Thank you in advance!
Earnings Amount Deductions Amount
Basic 13350 TDS Payable - Salary (192B) 0
H.R.A 0 Employee's P.F Contribution@12% 1602
Children Education Allowance 0 Employee's E.S.I Contribution@1.75% 234
Transport Allowance 0
Medical Reimbusment 0
Leave Travel Allowance 0
Helper 0
Uniform Allowance 0
Uniform Upkeep Allowance 0
Compensatory Allowance 0
Salary (A) 13350 Total Deductions 1836
Net Monthly Salary 11514 Gross Salary 13350
Cost To Company Per Month Per Annum
PF : Employer Contribution & Charges 1756 21066
ESIC : Emp Contribution 634 7610
Gratuity 642 7702
Medical Insurance 0 0
Accidental Insurance 34 405
Leave Encashment 556 6675 15 PL/yr
Total (C) 3621 22391
CTC 16971 203658
From India, Delhi
Dear Member,
First of all sorry for late reply, today only I have gone through your comments. I am delight the way you accept that things are new to you and understand your curiosity for gathering the knowledge (being co-proprietor). However, I have summarize the detail in the excel sheet duly matching with your calculations. Hope you will now understand easily. But still this required some updations/corrections. Pls note my observations:-
1. It seems you pay the Minimum Wages only as a basic and no allowance. As per Act it is permisible, but wef 01st Apr’18 the Minimum Wages for unskilled person is Rs. 13896/-. Rs. 13350/- is old rate which applicable last year.
2. Since you are paying only the Minimum Wages, hence note it is different for different categories as per below detail:- Semi-Skilled- Rs. 15296, Skilled- Rs. 16858 and so on. So I will advice to consider appropriate wages for each categoy.
3. You have considered Employer PF Contribution @ 13.15%, which is incorrect way. Ideally you should show @ 12% only. The PF admin charges (1.15%, which has further reduced to 1.00% wef 01st June’18) is employer’s liability towards the govt. Employee doesn’t get the amt., hence it is of no logic to show the govt. payable charges in employee’s CTC.
4. The most important part is that you have not shown the “Statutory Bonus”. Since you are 14 persons, hence Payment of Bonus Act, 1965 is applicable to you. You are bound to pay the Bonus as per the Act.
5. I have inserted one more sheet duly showing the increment @ 10%. The corrections also done and components have been changed accordingly. But in such case also note the Basic Wages should not be less than as per the Minimum Wages Act. (as you are following in your above mentioned example). Paying the Minimum Wages is statutory liability, however above that you can pay as per company policy.
Hope now I am cleared to your points. Fellow members can put more light on the matter.
From India, Delhi
First of all sorry for late reply, today only I have gone through your comments. I am delight the way you accept that things are new to you and understand your curiosity for gathering the knowledge (being co-proprietor). However, I have summarize the detail in the excel sheet duly matching with your calculations. Hope you will now understand easily. But still this required some updations/corrections. Pls note my observations:-
1. It seems you pay the Minimum Wages only as a basic and no allowance. As per Act it is permisible, but wef 01st Apr’18 the Minimum Wages for unskilled person is Rs. 13896/-. Rs. 13350/- is old rate which applicable last year.
2. Since you are paying only the Minimum Wages, hence note it is different for different categories as per below detail:- Semi-Skilled- Rs. 15296, Skilled- Rs. 16858 and so on. So I will advice to consider appropriate wages for each categoy.
3. You have considered Employer PF Contribution @ 13.15%, which is incorrect way. Ideally you should show @ 12% only. The PF admin charges (1.15%, which has further reduced to 1.00% wef 01st June’18) is employer’s liability towards the govt. Employee doesn’t get the amt., hence it is of no logic to show the govt. payable charges in employee’s CTC.
4. The most important part is that you have not shown the “Statutory Bonus”. Since you are 14 persons, hence Payment of Bonus Act, 1965 is applicable to you. You are bound to pay the Bonus as per the Act.
5. I have inserted one more sheet duly showing the increment @ 10%. The corrections also done and components have been changed accordingly. But in such case also note the Basic Wages should not be less than as per the Minimum Wages Act. (as you are following in your above mentioned example). Paying the Minimum Wages is statutory liability, however above that you can pay as per company policy.
Hope now I am cleared to your points. Fellow members can put more light on the matter.
From India, Delhi
Dear Sir,
thank you for the mail. You need not be sorry sir. I completely appreciate your kind response & information. Thank you once again. My concern is if doing increment on CTC factor is more apt way or doing on Basic salary is better way? Secondly is bonus a variable component for every year?or a compulsion -8.33% on Basic?? please clarify? Can I take my staff for an holiday and spend more amount instead of giving them bonus entitled amount?
Thank you & good day to you Sir.
Regards
reena
From India, Delhi
thank you for the mail. You need not be sorry sir. I completely appreciate your kind response & information. Thank you once again. My concern is if doing increment on CTC factor is more apt way or doing on Basic salary is better way? Secondly is bonus a variable component for every year?or a compulsion -8.33% on Basic?? please clarify? Can I take my staff for an holiday and spend more amount instead of giving them bonus entitled amount?
Thank you & good day to you Sir.
Regards
reena
From India, Delhi
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