Scribd
Upload
171 views17 pages

Salary Break Up

The document discusses how salary slips are prepared, including the components that make up an employee's Cost to Company (CTC). It explains the key elements like basic salary, dearness allowance, house rent allowance, conveyance, medical allowance, leave travel allowance, child education allowance, and special allowance. It also covers the deductions from salary like provident fund, employees state insurance corporation, professional tax, leave deductions, security deposits, and interest. The salary slip breakdown includes gross salary, deductions, and net take-home pay.

Uploaded by

Ram Surya Prakash Dommeti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
171 views17 pages

Salary Break Up

The document discusses how salary slips are prepared, including the components that make up an employee's Cost to Company (CTC). It explains the key elements like basic salary, dearness allowance, house rent allowance, conveyance, medical allowance, leave travel allowance, child education allowance, and special allowance. It also covers the deductions from salary like provident fund, employees state insurance corporation, professional tax, leave deductions, security deposits, and interest. The salary slip breakdown includes gross salary, deductions, and net take-home pay.

Uploaded by

Ram Surya Prakash Dommeti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 17

How Salary Slip is Prepared ????

Understand CTC and Salary Break up

 The Cost to Company refers to the total expenditure a company would have to incur to
employ you.

 Components of CTC
i - Fixed Salary
ii - Basic Salary
iii - Dearness Allowance
iv - House Rent Allowance
Detailed Salary
Monthly salary
Yearly Salary
Components Of Salary

 Basic salary
i. The Basic component is the primary component and the core of the salary
structure.
ii. It is fully Taxable.
iii. It is as per Minimum Wages Act.
iv. It is usually the largest component of the CTC making up for 40-45% of the total
CTC.
v. Components like Provident Fund, ESIC and Gratuity are dependent on it.
Dearness Allowance

 Dearness Allowance (DA) was introduced as part of the salary as a means to


reduce the burden of inflation on salaried employees.
 It is fully taxable.
 Amountable as per Minimum Wages Act.
 This amount is usually set to about 5% of the total CTC.
 Components such as PF and ESIC are dependent on it
House Rent Allowance

 HRA is a component that employees can leverage if they are living in rented
accommodations.
 It varies depending upon the state.
 50% of Basic + DA if Metro
 40% of Basic + DA if non metro
 Total Rent – 10% of Basic
Conveyance

 The conveyance component of the salary structure is paid to employees for


their travel expenses between their homes and workplaces.

 It’s also important to note that this component is only tax deductible if an
organisation does not have its own means of transport for employees.

 The maximum amount that is tax deductible under this component is Rs. 1,600
a year or Rs. 19,200 a year
Other Allowances

 Medical Allowance
i. Medical allowance is paid as a reimbursement for medical expenses borne
by employees.

ii. This amount is tax deductible up to Rs. 15,000 a year or Rs. 1,250 every
month.

iii. In order to claim tax benefits under this component, employees need to
submit proof of their medical expenses.
 Leave Travel Allowance(LTA)

i. Leave travel allowance (LTA) remunerates employees for their travel


within the country.

ii. An employee can claim tax benefits for the fare expenses paid for
his/her family when they take a holiday
 Child Education Allowance
i. This component is paid out towards tuition fees of employees’ children and is tax
deductible up to Rs. 100 every month for a maximum of two children.

ii. this amount is usually set to not more than Rs. 2,400 a year for an employee.

 Special Allowance
i. Special allowance is the balancing component of the salary structure.

ii. It is usually used by organisation as the leftover of the CTC when the rest of the
components have been paid out.
Deductions

 Deductions are elements of the salary that are part of the CTC but are
deducted from the in-hand salary that employees receive.
Provident Fund

 Provident Fund (PF) is calculated at 12% of Basic + DA + Special Allowance.

 If an employee’s Basic + DA + Special Allowance are less than Rs. 15,000 then it is
mandatory for Provident Fund to be deducted.

 Other employees can opt out by filling form 11 or can choose to have PF deducted on
the ceiling of Rs. 15,000 which would be Rs. 1,800 monthly.
Employees State Insurance Corporation
(ESIC)

 Deductions towards ESIC are mandatory for employees whose gross salary is not more
than Rs. 15,000.

 It is only applicable in companies where there are 10 or more employees within the Rs.
15,000 gross salary bracket.

 Employees have to make a contribution of 1.75% of the gross salary and employers
have to make a contribution of 4.75% of the gross salary.
Professional Tax

 Professional tax is the tax levied by Governments of certain states on salaried


employees.

 The states where professional tax is applicable are Karnataka, Bihar, West
Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam,
Chhattisgarh, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim.
 Other deductions

 Leave deductions

 Security deposit

 Interest

You might also like