Components of Remuneration

Total Cost to Company (TCC)

This is the sum total of Total Fixed Pay and Performance Bonus.

Total Fixed Pay (TFP)

Total Fixed Pay represents the fixed component of total compensation, which is available for distribution between Basic, Monthly Allowances and Retiral Benefits (Provident Fund). Though the company also makes a provision for Gratuity as per statutory requirement, it is not included in the calculation of TFP or TCC.

The distribution of TFP amount across its various components has been reworked in line with industry norms.

Basic:

By and large pegged at 35% of TFP. The basic salary shall be taxed as per the tax rate applicable.

Monthly Allowances:

HRA:

Paid out on a monthly basis at 50% of Basic Pay. The rates applicable for HRA are described in the following paragraph.

The current IT Act provides for relief to employees who receive house rent allowance from their employers to meet expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the employee.

The amount whichever is the least of a), b) and c) stated below is not to be included in the total taxable income. 1. The actual amount of such allowance received by the employee in respect of the period during which the said accommodation was occupied by the employee during the year. 2. The amount by which the expenditure actually incurred by the employee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of basic salary due to the employee in respect of the relevant period; or 3. An amount equal to i. where such accommodation is situated at Mumbai, Kolkatta, Delhi or Chennai, one-half of the amount of basic salary due to the employee in respect of the relevant period; and

ii.

where such accommodation is situated at any other place, two-fifths of the amount of basic salary due to the employee in respect of the relevant period. Rent receipts in original need to be submitted for the same. Balance amount (if any) shall be taxed as per the tax rate applicable.

In case, an employee is not staying in a rented accommodation, the entire HRA shall be taxed as per the tax rate applicable.

Transport Allowance:

Fixed amount of Rs. 800 to be paid on a monthly basis as part of salary. This amount shall be non-taxable.

Medical Reimbursement:

Monthly entitlement (shall not be more than Rs 15000 per annum as per current IT Act) will be paid out with salary every month.

By the 15th of March of the concerned financial year, employee shall submit proof of domiciliary medical expenses

incurred by the employee or the dependent members of his/her family. Family here means a) the spouse and the children of the employee and b) the parents, brothers and sisters of the employee provided they are wholly or mainly dependent on the employee.

Amount equivalent to the bills submitted (subject to a maximum of your annual entitlement as mentioned in Remuneration Details) shall be exempted from tax. Balance amount shall be taxed as per the tax rate applicable.

LTA:

Employees are entitled to Leave Travel Assistance (LTA) calculated at 2.5 times Monthly Basic. The monthly LTA entitlement will be paid with monthly payrolls.

Tax is exempted to value of Leave Travel Assistance (LTA) received by an employee, if following basic conditions are satisfied: i. ii. The exemption is admissible on the value of LTA for himself and his family in connection with his proceeding on leave to any place in India. The exemption is admissible in respect of actual expenditure incurred for journeys performed not only by the employee but also by his family. Family here means a) the spouse and the children of the employee and b) the parents, brothers and sisters of the employee provided they are wholly or mainly dependent on the employee.

iii.

The exemption can be availed only in respect of two journeys performed in a block of four calendar years. For this purpose the current 4-year block as specified by IT laws is 2006-2009.

iv.

If an employee does not avail LTA during the specified four-year block periods on one of the two permitted occasions, or on both occasions, exemption can be claimed provided he avails the assistance in the calendar year immediately following that block. This is popularly known as the carry over assistance. In such cases, the exemption so availed will not be counted for purposes of regulating the future exemptions allowable for the succeeding block of four years.

v.

The exemption will not be available to more than two surviving children. Provided that the aforesaid limit shall not be applicable for children born before 1st October 1998 and also in case of multiple births after one child.

Employee shall submit the claim in the prescribed format along with the proofs regarding the same by the 15th of March of the financial year in which he avails the LTA. Documents required for the same is ticket (original or copy) / travel agent bill (original) / petrol bill (original), as the case may be. The LTA exemption shall be an amount actually incurred on performance of such travel subject to following conditions: i. Where the journey is performed by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination; ii. Where places of origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination; and

iii.

Where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed between such places, the amount eligible for exemption shall be: 1. Where a recognized public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and 2. Where no recognized public transport system exists, an amount equivalent to the air-conditioned first class rail fares, for the distance of the journey by the shortest route, as if the journey had been performed by rail. Amount equivalent to the bills submitted (subject to a maximum of your annual entitlement as mentioned in remuneration Details) shall be exempted from tax. Balance amount shall be taxed as per the tax rate applicable.

Personal Pay:

This is a balancing factor. After distributing the salary amongst other heads, the remaining portion is plugged in Personal Pay. This amount is to be paid out on a monthly basis and shall be taxable as per the tax rate applicable. It is calculated as follows: Total Fixed Pay

Less. Basic Pay HRA Transport Allowance Medical Reimbursement LTA PF

Provident Fund:

The PF is calculated at the rate of 12% of monthly Basic Pay for all the employees and the employer makes an equal amount of contribution towards it. The PF amount specified in your remuneration details is the employer's contribution towards PF. Same amount of PF will be deducted from your per month salary towards employee's contribution towards PF.

Investment Proofs:

Based on investment declaration made by you, the Income tax will be computed, and tax deductions for the concerned financial year shall commence from the month of April onwards.

Investment proofs shall reach Payroll department by the 15 th January of concerned financial year so as to enable them to consider it for tax calculation. In absence of proofs, it will be deemed that no investments are made and the tax shall be calculated accordingly. Considering the investment proofs and the value of bills submitted, the deduction of estimated tax shall commence from the month of February onwards.

Deductions:

As mentioned above, there will be some deductions from the monthly salary owing to certain compliances. These deductions are:

i. ii. iii.

Professional Tax (as applicable) Income Tax (as applicable) Provident Fund (Employee's Contribution)