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15256281-Income-From-Salary Tax PDF
15256281-Income-From-Salary Tax PDF
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The study conducted was satisfactory. We wish them all the best.
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TABLE OF CONTENTS
Executive Summary.................................................................................................4
Remuneration: what is it? ....................................................................................5
Components of Remuneration System.7
What is deducted from salary? ........................................................................10
What exemptions are made in salary? ......11
Case Study: State Bank of India...13
Acknowledgements ...20
Bibliography21
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Executive Summary
The following case study acquaints the reader with the Remuneration System of the
Public Sector Bank State Bank of India.
It gives the reader a brief insight about the fundamentals of what constitutes a
salary structure for an employee.
Then through a Balance Sheet of the Company we will explain the various elements
listed and their relevance. Notes are mentioned for the same.
In conclusion we have prepared a sample salary slip to show how SBI remunerates
its employees.
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Perquisites
It is a personal advantage or benefit derived by virtue of employment office or
position. A perquisite denotes an additional monetary benefit going into the
pocket of or enriching the employee. Some perquisites are taxable while some
are non taxable. The taxable perquisites should be included in salary income.
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Direct Compensation
Basic pay
Its the monthly base amount a person is entitled to. This is the biggest part of the
pay, typically 50-60 per cent of the cost to the company (CTC). The basic tends to
form a higher portion of the salary at junior levels. At senior levels, the proportion of
basic goes down and variable pay components such as target-linked bonuses come
into the picture.
Basic determines the other components of an employees pay such as provident
fund (PF) contribution (both by employee and employer) and house rent allowance,
entitlement to loans by employers and, sometimes, designations and salary grades
are linked to the basic.
Dearness allowance
Dearness allowance is a part of a persons salary in India. It is calculates as a percent
of the basic salary. The amount calculated is then added to the basic pay as well as
the HRA to get the total salary. It is calculated on the basis of consumer price index.
Dearness allowance is basically given by the company so that rise in prices of
consumer price index will be compensated by increase in dearness allowance. As
consumer price index is very volatile and variable dearness allowance is has a
separate heading in salary slip.
City compensatory allowance
City Compensatory allowance is an additional allowance. It is not exempted from tax
like HRA. It enables the employee to bear the high cost of living prevailing in an
urban area or a city. If an employee is stationed at a bigger city, the person is
required to spend more therefore the employer compensates the employee with
this allowance.
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Indirect Compensation
Travelling allowance
It depends on area to area. Conveyance allowance is basically paid to cover an
employees work-related travel needs. An employee has to travel during the job so
this takes care of the transportation expenses. Up to Rs 800 is exempt from tax
every month.
This component helps make the pay more tax-efficient and influences the take home
pay of those at lower levels of pay.
Provision for newspaper
In certain factories/establishments the employees are reimbursed the cost of
Newspapers while in some other factories/establishments the employees are paid
monthly newspapers allowance instead of reimbursement of the cost of the
Newspapers. This allowance is called newspaper allowance.
Telephone allowance
All officers of SMGS III and above, all Branch Managers and other functionaries who
are permitted by competent authority are eligible for this allowance.
In addition to free calls, reimbursement will be as under:
TEGS VII 2000 calls per month
TEGS VI 1500 calls per month
SMGS IV & V 800 calls per month
MMGS II & III 300 calls per month
JMGS I 200 calls per month
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Grade
JMGS I
JMGS I
JMGS I
Designation
Assistant
Manager
Assistant
Manager
Assistant
Manager
Basic pay
10000
14880
21040
Dearness allowance
18
27
38
400
540
540
850
1265
1788
350
350
350
2750
2750
2750
Gross
14368
19812
26506
PF (Employers
contribution)
1000
1488
2104
Net [Gross +
employers
contribution to PF]
15368
21300
28610
PF (Employees
contribution)
1000
1488
2104
16368
22788
30714
Annual CTC
196416
273456
368568
City compensation
allowance
House Rent
Allowance
Provision for
newspaper
Travelling
allowance
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Grade
MMGS - II
MMGS II
MMGS - II
Designation
Deputy
Manager
Deputy
Manager
Deputy
Manager
Basic pay
13820
19360
22920
Dearness allowance
25
35
41
540
540
540
1175
1646
1948
500
500
500
3025
3025
3025
Gross
19085
25106
28974
PF (Employers
contribution)
1382
1936
2292
Net [Gross +
employers
contribution to PF]
20467
27042
31266
PF (Employees
contribution)
1382
1936
2292
21849
28978
33558
Annual CTC
262188
347736
402696
City compensation
allowance
House Rent
Allowance
Provision for
newspaper
Travelling
allowance
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Grade
MMGS - III
MMGS - III
MMGS - III
Designation
Manager
Manager
Manager
Basic pay
18240
21040
23520
Dearness allowance
33
38
42
540
540
540
1550
1788
1999
500
500
500
3300
3300
3300
Gross
24163
27206
29901
PF (Employers
contribution)
1824
2104
2352
Net [Gross +
employers
contribution to PF]
25987
29310
32253
PF (Employees
contribution)
1824
2104
2352
27811
31414
34605
Annual CTC
333732
376968
415260
City compensation
allowance
House Rent
Allowance
Provision for
newspaper
Travelling
allowance
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Grade
SMGS - IV
SMGS - IV
SMGS - IV
Designation
Chief
Manager
Chief
Manager
Chief
Manager
Basic pay
20480
23520
24140
Dearness allowance
37
42
43
540
540
540
1741
1999
2052
700
700
700
3575
3575
3575
Gross
27073
30376
31050
PF (Employers
contribution)
2048
2352
2414
Net [Gross +
employers
contribution to PF]
29121
32728
33464
PF (Employees
contribution)
2048
2352
2414
31169
35080
35878
Annual CTC
374028
420960
430536
City compensation
allowance
House Rent
Allowance
Provision for
newspaper
Travelling
allowance
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Grade
SMGS - V
SMGS - V
SMGS V
Designation
Assistant
General
Manager
Assistant
General
Manager
Assistant
General
Manager
Basic pay
24140
25380
26620
Dearness allowance
43
46
48
540
540
540
2052
2157
2263
700
700
700
3850
3850
3850
Gross
31325
32673
34021
PF (Employers
contribution)
2414
2538
2662
Net [Gross +
employers
contribution to PF]
33739
35211
36683
PF (Employees
contribution)
2414
2538
2662
36153
37749
39345
Annual CTC
433836
452988
472140
City compensation
allowance
House Rent
Allowance
Provision for
newspaper
Travelling
allowance
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Grade
TEGS - VI
TEGS - VI
TEGS VI
Designation
Deputy
General
Manager
Deputy
General
Manager
Deputy
General
Manager
Basic pay
26620
28660
29340
Dearness allowance
48
52
53
540
540
540
2263
2436
2494
900
900
900
4125
4125
4125
34496
36713
37452
PF (Employers
contribution)
2662
2866
2934
Net [Gross +
employers
contribution to PF]
37158
39579
40386
PF (Employees
contribution)
2662
2866
2934
39820
42445
43320
Annual CTC
477840
509340
519840
City compensation
allowance
House Rent
Allowance
Provision for
newspaper
Travelling
allowance
Gross
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Grade
TEGS VII
General
Manager
TEGS VII
General
Manager
TEGS VII
General
Manager
Basic pay
29340
31600
32600
Dearness allowance
City compensation
allowance
House Rent
Allowance
Provision for
newspaper
Travelling
allowance
53
57
59
540
540
540
2494
2686
2771
1000
1000
1000
4400
4400
4400
Gross
37827
40283
41370
PF (Employers
contribution)
2934
3160
3260
Net [Gross +
employers
contribution to PF]
40761
43443
44630
PF (Employees
contribution)
2934
3160
3260
43695
46603
47890
Annual CTC
524340
559236
574680
Designation
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Acknowledgements
We as a group hereby give our sincere thanks to Prof. Mr. Sandeep L. Chopde for
giving us this opportunity to use our knowledge in the subject of Accountancy and
improve our knowledge in the subject of Taxation.
We would like to thank Mr. Suhas Phalnikar, Branch Manager of SBI, Fort and Mrs.
Pratima Avasare, Branch Manager, Andheri for providing us with valuable
information regarding the project.
We also thank Mumbai Education Trust for providing us with the books, notes, the
invaluable information and help.
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Bibliography
Varsha Ainapure, Mukund Ainapure Direct and Indirect taxes. Mumbai: Manan
Prakashan, 2000
A.M. Sharma Understanding Wage System. Delhi: Himalaya Publication House,
2004
State Bank of India Officers Association (Mumbai Circle), Service Conditions at
a Glance, 2008
Google
http://www.google.co.in/
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