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For example.
Basic Rs.20000/-
HRA Rs.10000/-
Actual Rent Rs.8000/-
Excess of actual rent paid over 10% of
Basic (10%x2000 – 8000) Rs.6000
Hence max exemption allowed is lowest i.e.
Rs.6000/- subject to Rent Receipts of
Rs.6000/- only
Transport Supposed to be conveyance allowance Rs.800/- (max)
Allowance meant for transportation between office and
residence only.
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.
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
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.
Note:
You can also choose how you would disburse the amounts of incentives.
In my opinion best will be to include incentive amount in the monthly salary of
employee for next financial year…. Or some companies disburse it quarterly, half
yearly or yearly on a lump sum basis. The decision can be based on your intentions
whether you would like to give a lump sum big amount in the hands of an employee
so that he can realize his big personal aspirations at one go, or you can choose to
include this in monthly salary so that employees’ monthly income inflates regularly.
MONTHLY ANNUALLY
SALARY COMPONENT Amount (Rs.) Amount
(Rs.)
Basic Rs.3500 (min)
HRA 50% Basic (Metro cities) 40% Basic
(Non Metro)
Transport Allowance Rs.800 (max)
Children’s Education Rs.200 (max)
Allowance
Special Allowance Balancing Figure
Medical Reimbursements Rs.1250 (max)
Food Coupons Rs.1000 (max)
TOTAL MONTHLY
SALARY
Net Take Home Total Monthly Salary – PF – Profession
Tax
Retiral Components
Provident Fund (Co. 12% Basic
Contr.)
Gratuity (15 days basic) 15 days Basic
Annual Components
Leave Travel Allowance No Limit
Gift Vouchers Rs.5000 (max)
ANNUAL C.T.C.
OTHER BENEFITS
Personal Accident Insurance Scheme – Rs.200000/-
Medical Insurance Scheme – Rs.200000/-