Introduction: Compensation &

Benefits
THE BASICS – CHAPTER 1

BY ANKUSH TALWAR
 1 Typical Compensation Structure

2 Tax Exemption Possibilities

Table of
Contents
3 Statutory Deductions

4 Benefits
Typical Compensation Structure in an
Organization

Annual
Variable Variable Pay – At Target (% of AGC)
Cash

Social Company PF Contribution

Security (@12% of Base/Basic)

Annual
Total
Cash
Annual Base/Basic Salary (50% of AGC)
Guaranteed House Rent Allow. (50% of Base/Basic Salary)
Cash Special Allowance (Balancing Figure)
(AGC)
 Tax Exemption
Possibilities
Possible
Compilation of
Leave Travel Allowance 1 Month Base/Basic Salary Special
Telephone Reimbursement INR xxxx per month Allowance
(Balancing Figure)
Child Hostel Exp. Reimbursement INR 300/child/month – upto 2 child

Child Edu. Exp. Reimbursement INR 100/child/month – upto 2 child

Professional Development Fees INR xxxx/annum

Gift Coupons INR xxxx/annum

Food Coupons INR 50/per meal – max 2 meal/day

Books & Periodicals INR xxxx per month

Car Lease Plan As per Grade/Level/Band

Fuel, Maint. , Insc. & Driver Salary As per Grade/Level/Band Only if Car lease is opted
 Statutory Deductions
Provident Fund
Employer-Employee Contributory Sch.
Superannuation
Defined Contribution Sch.
Gratuity
Payable after completion of 5 years
• The Supreme court on 28 February 2019 ruled that all allowances in
question are to be treated as wages for the purpose of provident
fund (PF), effectively widening the definition of pay for the purpose of PF.
• PF Wages : INR 15000/month
• 12% of PF wages.
• PF Wages : Base/Basic Salary + Allowances
• Non-Mandatory scheme
• Existence depends on from Company to Company
• Employee Contribution : 15% of Base/Basic Salary
• 15/26 * (Last drawn Base/Basic Salary)* number of years of service, OR
• 4.81% of Base/Basic Salary
• Income Tax Exemption limit upto INR 20 lakhs
Benefits : Introduction

Group Medical Coverage Group Personal Accident

• Health Insurance Plan
• Offered from Employers to Employees, which
covers employee's family as well
• Provides Risk Coverage to tide over difficult times
• It protects the financial risk due to accidental
permanent disability or accidental death of the
earning family member
• Offered from Employers to Employees

Group Term Life

• Term Insurance Plan

• The insurer issues the Employer a master contract

with coverage extended to Employees
Thanks