Mahindra and Mahindra: COMPENSATION RULES AND DESIGN GUIDELINES Monthly Components Basic Guidelines Minimum Basic figure

for skilled, semi skilled and un skilled employees is a minimum of Rs.2650, 2950 and 3250/-. However on the safer side, Basic figure less is not less than Rs.3500/- p.m. Income Tax Benefit: NIL Maximum 50% basic (Metro cities) 40% basic (non metro cities). Income Tax Benefit: Excess of Actual rent paid over 10% of Basic salary OR Maximum HRA allowed (50% or 60% of basic) OR Actual Rent Paid whichever is lower is Exempt from Tax. Conveyance allowance meant for transportation between office and residence only. Income Tax Benefit: Exempt maximum up to Rs.800/- per month. No proof required. Income Tax Benefit: Rs.100 per child subject to max 2 children. Hence maximum Rs.200/- is exempt Balancing figure after choosing all the above components with respect to their maximum limits absorbed, remaining amount can be named as Special Allowance. It is fully taxable. Pay against medical bills Income Tax Benefit: Maximum Rs.1250/- p.m. (Rs.15000 p.a.) is exempt only if Original Bills are provided Non cash component, exempt up to Rs.1000/- p.m. Employers contribution (this is given to RPFC directly. However employees contribution is deducted from his Monthly salary above and sent to RPFC. Hence total deduction works out to be 12+12 = 24% of Basic. Income Tax Benefit: Employees contribution of 12% is eligible for Deduction from Taxable income. It can be treated as exempt investment. It is an annual component. 15 days monthly basic per year. Journey within India primarily by Rail 2nd A/c class for employee and his immediate family (spouse, children, parents, siblings).

House Rent Allowance (HRA)

Transport Allowance

Childrens education allowance

Special Allowance

Medical Reimbursements

Food Coupons Provident Fund (Retrials)

Gratuity(Retirals) Leave Travel Allowance / Concession (Annual)

Gift Vouchers

PERQUISITES Rent Free Accommodation

Car (For personal) Owned by the Employer

Employee Stock Option Plan

Non cash component, these coupon companies like Sodexho Pass provide attractive Gift Vouchers, which is given on Diwali Festival Occasion. For junior employees amount can be lower, for seniors, amount can be higher up to Rs.5000 or so. For Senior Management Employees only Income Tax effect: Taxable perquisite Value of rent free accommodation is considered to be taxable for the period of house occupied is either of the following: 10% of Salary (for metro cities) or (7.5% for non metro cities) + Excess of Fair Rent Value (market rent) over 60% of salary (i.e. Market Rent 60% of salary) = Total taxable value of rentfree accommodation Income Tax effect: Taxable Value includes the following Actual Running & Maintenance expenditure incurred by the employer + Drivers Salary + Depreciation any amount charged by employer to employee for personal use of the car. Employee exercises the option plan by buying out the shares during the exercise period however tax liability occurs only when an employee sells the shares on the value of sale made under the Capital Gains head of income.

OTHER BENEFITS Personal Accident Insurance For employee only Scheme Medical Insurance Scheme (For employee & dependents which can be spouse, first two children, parents or in-laws (either of them) etc. Performance linked insurance The Performance Linked Incentive Plan is based on employees plan Performance Ratings during the Annual Performance Appraisal Plan in the month of March / April each year. Each employee would be eligible for a performance based incentive plan based on following guidelines. Maximum Potential Incentives under PLIP will be 30% of Total Monthly Salary. OR up to Rs.75000/- p.a.