ctc ppt.pptx

7/24/2019 CTC ppt.pptx

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COMPENSATION & CTC


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WHAT IS COMPENSATION?

Compensation is the

remuneration received by an

employee in return for his/hercontribution to the

organization. It is an organized

practice that involves balancing

the work-employee relation byproviding monetary and non-

monetary benefits to

employees.


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COMPENSATION

EMPLOYEE

COMPENSATION

EXECUTIVE

COMPENSATION


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EMPLOYEE COMPENSATION

Compensation of employees (CE is measured by thevalue of the remuneration in cash or in kind which an

employee becomes entitled to receive from an employer

in respect of work done! during the relevant accounting

period - whether paid in advance! simultaneously! or in

arrears of the work itself.


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EXECUTIVE COMPENSATION

E"ecutive Compensationishow top executives ofbusiness corporations are

paid. This includes a basicsalary, bonuses, shares,options and other companybenefits.

It has become integral part of

management.


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Aims of Employee Compensation

Attract capable employees to the

organization.

otivate them toward superior

performance.

!etainment of their services over an

extended period of time.


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COMPENSATIONINCLUDES

DIRECT

PAYMENT

INDIRECT

PAYMENT


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salary

Basic + DA+

Commission etc

Normal components

Allowances

Perquisites

Taxable

To

employee

Fringe

Benefit tax

Taxable

To Employer

Applicable

To companies


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COMPENSATION

Be Adequate - must work to

ttr!t "# r$t%" st %"t'os$ r$s w'$r$ t'$%"t$r"t%o"( or)"%*t%o" 's

t'$ )r$t$st "$$#s "#o++ortu"%t%$s,

Be Cost Efective- s'ou(#.!%(%tt$ tr"s.$r o.%"t$r"t%o"( $m+(o/$$s %" t'$most !ost-$$!t%0$ m""$r .ort'$ 1rm "# 2$ $s to


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Be Motivating - s'ou(# 2$

su4!%$"t to mot%0t$$m+(o/$$s to '%)'+$r.orm"!$ ($0$(s "#

r$%".or!$ #$s%r$# 2$'0%ors,

Be Equitable - $m+(o/$$s

s'ou(# 2$ m#$ to .$$( t't!om+$"st%o" s/st$m %s$5u%t2($3 E6t$r"( & I"t$r"(E5u%t/,


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I"T!#$%CTI#" #& CTC

Cost to Company 'CTC( is a term used to

describe an investment without return.

Cost to Company can also be used to refer

to the total cost that an organization isspending towards their employee including

the )alary, *er+s, Cost related to benefits,

Cost related to hiring, Training, !etirals,)tatutory Contributions etc.


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CTC is simply the money given to you the money

spent on you

Includes both monitory and non-monitory.

asic $A *erformance lin+ed pay onus /!A Allowances !eimbursements 0TA *er+s *er1uisites )ocial benefits 'li+e *&,2ratuity, )uperannuation( Insurance edical

!eimbursements Training costs ealcoupons Transport Club membership fees other subsidies 3.


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asics

2ross )alary4 is salary before deductions

"et )alary4 is what you get after deductions

$eductions 4 *& Taxes 0oans etc.

CTC 4 CTC means Cost To Company

Cost to company 'CTC( is the total cost that

an employee is incurring in a company.


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Judge the benefits holistically!

Your tk$-'om$ +/

P/ .or P$r.orm"!$

A((ow"!$s

7$%m2urs$m$"ts

PF

8rtu%t/

Su+$r""ut%o"

Post r$t%r$m$"t'$(t' 2$"$1ts

So!%( s$!ur%t/m$sur$s (%k$2$"$0o($"t .u"#s

Tr%"%") to %m+ro0$/our k"ow($#)$ &sk%((

O"-9o2 ($r"%")

Em+(o/$$ sto!ko+t%o"s

H$(t' %"sur"!$

M$#%!( 2$"$1ts

S'ort T$rm Lo")-t$rmM$#%um T$rm

Com+$"st%o" %s (w/s!om+r$'$"s%0$:


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Components of Cost to Company 'CTC(

)alary

asic

5$earness Allowance '$A(

5Incentives or bonuses

5Conveyance allowance

5/ouse !ent Allowance '/!A(5edical allowance

50eave Travel Allowance or Concession '0TA 6

0TC(57ehicle Allowance

5Telephone 6 obile *hone Allowance

5)pecial Allowance.


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asic salary

asic salary is a fixed component of your ta+e-home

pay for the wor+ you do8

It is also the base of computations of other benefits li+e

*&, 2ratuity, 0TA and sometimes /!A

It is taxable and best if it is be around 9:; of CTC.

The paradox here is higher ratio of basic salary means

more tax and low ratio means impact on socialbenefits li+e *& and 2ratuity etc.


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Allowance

Allowances paid to the employee

irrespective of the expenditure incurredunder the head of allowances.

a


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$earness Allowance

It is the allowances is paid to neutralize impact

of Inflation.

This is something li+e ma+ing cost-of-living

ad


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/ouse !ent Allowance

/!A is usually a ma


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/!A and tax exemptions

?ou must have /!A component in your salary

?ou must be paying rent

?our spouse shouldn@t be the owner of the house

?ou are not allowed to pay rent to your spouse and get tax

exemption8 /owever, you can do claim tax exemption if you pay

rent to your parents or your relatives.

Amount eligible for tax exemption which ever is lowest of the

following B conditions

>. In etros '$elhi , umbai,ol+ota and Chennai( =:; of

annual salary, for rest of India 9:; of annual salary

D. Actual /!A !eceived from the company

B. The amount of rent actually paid in excess of >:; of annualsalary

)alary means asic $A *erf. 0in+ed bonus . 'Allowances and

per1uisites to be removed(


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Conveyance Allowance

Transport allowance is paid to meet traveling

expenses from residence to office

Amount up to !s :: per month '!s. F,G:: per year( is

tax exempted no need to produce receipts.

City compensatory allowance

*aid to compensate the costs involved in a city life8

Taxable


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0eave Travel Allowance

0TA is for Travel with your family ')elf,

)pouse and Children (to any place in India

The tax implication in layman@s language is

simple ,Tax exempted if you provide proof of

travel and expenditure else taxable

Two 0TAs in a bloc+ of four years is allowed

for tax exemption.


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*ay for *erformance6Incentives

*ay for performance organizations give

a part of the salary as pay forperformance

The periodicity of payment may differfrom company to company

The amount received under this head istaxable


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onus

onus payment in many organization is governed by

*ayment of onus act >FG=,India

%sually paid once an year, mostly profit sharing with

employees by the company some times as a percent of

basic to all employees or may be based on employeeHs

performance and contribution

There can be many types 3.here are few3 *rofit 6 2ain sharing

&estival bonus

oining bonus

!etention bonus

Employee referral bonus

onus is Taxable


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!eimbursements or Claims

!eimbursement of certain expenses li+e *hone,

obile, Internet etc.

!eimbursements are Tax free.

If you are entitled to !est. D::: obile expences,

and you have a bill of !est. >:::, ?ou will get only!s.>,:::.

!emember it is an reimbursement not an

allowance8


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edical !eimbursement

edical expenditure incurred on self or

dependants

Amounts up to !s.>=,::: per is not

Taxable sub


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Children Education allowance

Children Education Allowance is *aid to aid

children@s education. !s D,9:: per year is tax-free.' !s.>:: *er

month per child up to D children(

Children /ostel allowance 4

!s J,D:: per year is tax-free.' !s.B:: *er

month per child up to D children(

& i b fi


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&ringe benefits

/umanistic consideration 4 education, health,

housing )tatutory 4 canteens, rest sheds, crKche,

maternity, paternity,

)ecurity 4 2ratuity, *&, *ension, edical

/azard of industrial life 4 E)IC, wor+mencompensation act, /ospitals

Tax considerations 4 transport, interest freeloans, loans at concessional rates

%tilization of leisure time 4 holiday homes,foreign trips, guest houses

Inculcating a sense of involvement 4concessional lunch, subsidized picnics


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