Final Notes Before Salary Breakup Assignment
You’ve now understood the components of the Indian salary breakup and how they are calculated. While different organizations may present the breakup in various formats, the core structure and calculation principles remain the same.
Before creating a salary breakup, keep these key points in mind:
- For low-budget salaries, ensure compliance with the minimum wages applicable in the respective state.
- Check the applicable Professional Tax rate for the employee’s state.
- Special Allowance is mandatory only in Maharashtra and is subject to PF contributions.
- Service Weightage applies only in Karnataka and only if the employee has completed at least one year. It is 2% of the basic salary and attracts PF.
- Income Tax is not included in the offer or revision letters, as it depends on the employee’s investments. It is shown only in the payslip.
- Labour Welfare Fund (LWF) is a yearly contribution from both employer and employee and is not shown in offer or revision letters.
- Voluntary Provident Fund (VPF) is a tax-saving investment scheme contributed only by the employee. The employee can choose the contribution amount, which is added to the regular Provident Fund. VPF is not shown in the offer letter.
Now that everything is clear, let’s begin with the practical assignment.
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