Salaries are paid by the employers to the employees in exchange for the services they provide to the company. An employee’s salary comprises different components like allowances, gross salary, prerequisites, etc. The detailed breakup of these components is known as a salary structure.
Below are the detailed components of a salary structure:
The salary amount calculated before any kind of deduction is the gross salary. This includes basic pay, bonus, or any other differential.
Basic salary refers to an employee’s basic income ideally between 35-50% of their total salary.
Allowances are the remuneration paid to the employees during their job contract. This includes
Employee Provident Fund is where employees and employers contribute some amount each month. It is a saving scheme for the employee and the withdrawal can be made one month after retirement or the termination of service.
A lump-sum amount is given to employees heading to their retirement. It is calculated on the basis of the number of years of the employees who have completed a minimum of 5 years. Most companies with more than 10 employees come under this act.
The state government imposes this fee directly on the monthly salary of an employee. While professional taxes are calculated differently in each state, a yearly maximum of Rs. 2500 can be assessed.
These are the benefits that an employee can get access to based on their position or authority in the company. Usually non-monetary in nature, these are offered over and above the monthly salary of an employee.
Any company with 10 or more employees is bound to register for this scheme. Employees and employers contribute 1.75% and 4.75% of their salary.
Also, See: Universal Account Number
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