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SALARY
Prepared byAviram Jena
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Contents
Net Salary
Dearness Allowance(DA)
Travelling Allowance(TA)
Provident Fund(PF)
Gratuity
House Rent Allowance(HRA)
Gross Salary
Insurance
Mediclaim
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Gross Salary
Gross Salary is the total salary received on MONTHLY BASIS
Gross salary = Salary before deductions
Key Definition
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Contents Gross Salary
Dearness Allowance(DA)
Travelling Allowance(TA)
House Rent Allowance(HRA)
Provident Fund(PF)
Gratuity
Insurance
Mediclaim
Net Salary
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Net Salary
Net Salary
Net Salary is gross salary less the deductions which are made on account of statutory compliances(like PF, Income Tax, Professional Tax) and other dues (Like Loans and Advances taken) which you owe to the Company and Legal dues if any. It is something you get in hand and commonly refer to as Take Home Pay.
Key Definition
Net Salary = Salary after deductions
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Let me explain with an example -
Let us say the employee earns the following per month:
• Basic Salary - INR 10000House Rent Allowance - INR 5000Convyeance Allowance - INR 1000Magazine Allowance - INR 500Education Allowance - INR 250
Then, GROSS SALARY - INR 16750
Deductions:
• Provident Fund - INR 1200Income Tax - INR 750Profession Tax - INR 130Loan Deduction - INR 750Total Deductions - INR 2830
Then, NETT SALARY - INR 13920
• His Leave Travel Allowance - INR 10000 per annumMedical Reimbursement - INR 10000 per annumPremium for mediclaim - INR 1500 per annumPF- Management Contrib.-INR 16332 per annum
Then, CTC (Cost to Co.) - INR 2,38,832 per annum.
CTC = Monthly Gross Salary X 12 + Annual benefits (INR 37832)
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Contents
Net Salary
Travelling Allowance(TA)
Provident Fund(PF)
Gratuity
House Rent Allowance(HRA)
Gross Salary
Dearness Allowance(DA)
Insurance
Mediclaim
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Dearness Allowance
Employees having fixed income suffer the
most due to rise in prices and to compensate
their loss, they are paid D.A. So D.A is nothing
but an addition salary and it is fully taxable.
Sometimes it is mentioned that :
1. D.A enters into pay for service benefits.
2. D.A enters into pay for retirement
benefits.
3. D.A is given under the terms of
employment.
4. Dearness pay.
Thus, it is treated as part of salary for certain
purposes such as provident fund, value of
rent free house, HRA, bonus, gratuity,
leave encashment
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Contents
Net Salary
Dearness Allowance(DA)
Provident Fund(PF)
Gratuity
House Rent Allowance(HRA)
Gross Salary
Travelling Allowance(TA)
Mediclaim
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Travelling Allowance
Any allowance granted to meet the cost of travel on tour or on transfer by the employer to his employee.
It is exempted upto actual expenditure incurred for the purpose of employment. Excess , if any, will be taxable.
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Contents
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Net Salary
Dearness Allowance(DA)
Travelling Allowance(TA)
Provident Fund(PF)
Gratuity
Gross Salary
House Rent Allowance(HRA)
Mediclaim
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House Rent Allowance
Some times the employer does not provide rent free accommodation but instead makes a provision to pay some amount in cash, so that the employee may be compensated to some extent as far as rent is concerned. The amount of cash paid is known as house rent allowance.
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Contents
Net Salary
Dearness Allowance(DA)
Travelling Allowance(TA)
Gratuity
House Rent Allowance(HRA)
Gross Salary
Provident Fund(PF)
Mediclaim
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Provident Fund
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To encourage savings for the social security of employees , the govt. has set up various kinds of provident fund. The employee contributes a fixed percentage of his salary towards these funds and in many cases employer also contributes. The whole contribution along with interest is credited to employee’s account. He will get payment out of this fund at the time of retirement and at some other important occasions. If the employee dies , his heirs will get the full payment.
Provident funds are of four types:1. Statutory provident fund2. Recognized provident fund3. Unrecognized provident fund4. Public provident fund
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Contents
Net Salary
Dearness Allowance(DA)
Travelling Allowance(TA)
Provident Fund(PF)
House Rent Allowance(HRA)
Gross Salary
Gratuity
Mediclaim
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Gratuity
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Gratuity refers to a lump sum amount payment made by an employer to his employee at the time of leaving job in appreciation of his long and loyal services. Earlier it was a voluntary payment but now it has become a sort of compulsory payment for govt. employees, semi govt. employee and all other employees working in banks, colleges, factories etc.
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Contents Gross Salary
Net Salary
Dearness Allowance(DA)
Travelling Allowance(TA)
House Rent Allowance(HRA)
Provident Fund(PF)
Gratuity
Mediclaim
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MediClaim
Mediclaim Policy is an Insurance coverage wherein any of your Health related hospitalization bills can be claimed from the insurance company. There are two different ways to get your bills claimed either by cashless facility i.e your bills are directly paid to the hospital or you can pay your bills in the hospital and get an reimbursement after submission of the same to the insurance company.
Mediclaim policy helps employee for take the benefit of medical treatment. Employee’s come under it who pays amount to insurance company
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