If in an organization,the Finance Department is following some Salary break up policy for CTC decided by managment. If during the financial year they want to change the restructure the policy of payroll, then is it advisable to change it in between FY? Inform us about implications of the same.
Generally the break up is being decided and calculated by Finance or HR?
27 October 2008
Generally finance in consultation with HR will do the restructuring. Restructuring is preferred in the financial year beginning. Otherwise it may create tax issues to the recipient.
The thing happening is; earlier whatever break up was; the company was doing the calculation of Tax by considering CTC in the same fashion but now they want to add PT, PF(Emp and Empr Contribution), Mediclaim in the CTC and then re-calculate everything, so is it a matter of prudence to do so?
The thing happening is; earlier whatever break up was; the company was doing the calculation of Tax by considering CTC in the same fashion but now they want to add PT, PF(Emp and Empr Contribution), Mediclaim in the CTC and then re-calculate everything, so is it a matter of prudence to do so?
Earlier they were mentioning in Appointment letter for CTC as only empoluments i.e.Basic, HRA, Prof Dev Allownace, Medical and Conv. Now they want to include PF(emp+ empyr) and mediclaim in CTC and they want to restructure the salary retrospectively. The intricacy is; we need to give all employees, the revised letters and take home will get reduced and tax calculation will change. So is it a matter of prudence to do so all of a sudden.
Secondly is gratuity mandatory to incorporate in CTC as a policy?
29 October 2008
Yes, you have to reprint all the salary letters with new structure from the begining of the year.
The matter of prudence is to be descided by the management as to is it that necessary to disturb the salary structure when half year is already closed.
If the revised salary results in increasing the net pay no issues. But if it goes to the other side, then there will be long term pains to the employees from all sides.
Yes, gartuity payments should be included in the CTC letter.
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