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Salary Structure is an important aspect for a salaried individual, as it gives clarity to the individual about tax savings and the take home amount.
Cost to Company (CTC) is generally divided in to following parts: -
Each part of CTC has an important role to play, in taxation in India and also tells an individual about his/her take home salary.
LTA or Leave Travel Allowance is a reimbursement, which an employee gets for his/her travel expenses. This reimbursement is provided to the employee for travelling within one’s own country.
You can claim Tax Benefits under LTA in certain situations: -
Other than the above-mentioned allowances, there are special allowances too, which are taxable.
PF contribution is defined as a savings policy where 12% of the Basic Salary of an employee and an additional 12% is contributed from the employer’s side, the amount is then deposited in the employee’s PF account. The whole of an employee’s 12% contribution goes into the EPF account, with that 3.67% of the employer’s contribution also goes into EPF account and the remaining balance i.e. 8.33% goes into your EPS (Employee’s Pension Scheme). PF funds also generate an interest of 8% - 12%, depending on the rate assigned as per the government and the Central Board of Trustees.
When an employee joins a new company then it is important that the employee provides his/her EPF number to the new employer and make sure that EPF details are updated as per the new company’s credentials.
When an employee earns a gross salary of more than Rupees 15,000 then deductions towards ESIC are mandatory. ESIC deduction is applicable only for companies with more than 20 employees whose gross salary falls within the Rupees 15,000 bracket. The employee must contribute 1.75% of the gross salary while the employer contributes 4.75% of the gross salary towards the employee’s ESIC.
The government in certain states of India imposes Professional Tax upon salaried employees. The list of states where Professional Tax is imposed are; Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh and Sikkim. The amount deducted against Profession Tax varies from one state to another.
Labour Welfare Fund is a contribution made towards benefiting the labour class citizens by salaried employees. Labour Welfare Fund is deducted in states like; Karnataka, West Bengal, Maharashtra, Andhra Pradesh, Kerala, Goa, Delhi, Punjab, Haryana and Madhya Pradesh. Both the employer and the employee make contributions towards Labour Welfare Fund, but the employer contributes twice the amount contributed by the employee.
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There are two type of deduction made from the salary of an employee:
The Economic Times Wealth: Vikas Dahiya, founder and chief of tax compliance platform, All India ITR announced a free of cost tax returns solution for members of the Indian Armed Forces. Due to their disciplined schedules, annual tax returns become a hectic chore for servicemen. They need to repaid for their services to millions of citizens and this initiative will go a long way to alleviate the stresses in their service conditions.
18th July 2017
THE ECONOMIC TIMES