School of Management Studies , Cusat , Kochi

1. HRM ASSIGNMENT 2
Manufacturing(Garment
Industry)
Service(Education )
Kitex Garments Ltd. Smt.M.K.Patel H.S.School
Designation : Marketing
Executive
Designation : Asst.Teacher
Total Work Experience : 3 Year Total Work Experience : 1 Year
Earnings
%
Proportion Earnings % Proportion
Basic 46.9 Basic 101.9
Dearness Allowance 23.4
Dearness
Allowance 50.9
Conveyance
Allowance 9.3
Transport
Allowance
Medical Allowance 7
Medical
Allowance .6
House Rent
Allowance 18.7
House Rent
Allowance 20.3
Food Allowance 2.8
Special
Allowance
TotalEarnings 108.10 TotalEarnings 173.7
Deductions Deductions
Provident Fund 5.6 Professional Tax 1.3
Labour Welfare
Fund 1.8 Provident Fund 27.2
Professional Tax .7
Labour Welfare
Fund 2.6
Income
Tax(TDS) 6.7
Life Insurance 33.9
Credit Society 2.0
TotalDeductions 8.10
Total
Deductions 73.7
Net Pay(Total
Earnings-Total
Deductions) 100.00
Net Pay(Total
Earnings-Total
Deductions) 100.00
Components of a Salary Slip:

2. The salary slip is broadly divided into 2 components namely:-
1. Earnings and,
2. Deductions
1. Earnings:
Basic Pay:
Basic pay is the exact money paid to an employee before any extra addition or
payment deduction. The Basic component is the primary component and the
core of the salary structure. It is usually the largest component of the CTC
making up for 40-45% of the total CTC. The basic plays an important role in
defining the salary as other components like Provident Fund and Gratuity.
Entire basic pay is a part of take home salary and this component is 100%
taxable. The amount of basic salary varies depending on your designation and
industry. It is a fixed amount that is paid prior to any reductions or increases due
to bonus, overtime or allowances. Most of the other components, like
allowances, are based on the basic salary.
Dearness Allowance:
Dearness allowance is a certain percentage of the basic salary paid to
employees, aimed at mitigating the impact of inflation. It is also paid by the
government to employees of the public sector and pensioners of the same.
Dearness Allowance (DA) was introduced as part of the salary as a means to
reduce the burden of inflation on salaried employees. This amount is usually set
to about 5% of the total CTC and like the Basic component it also has an effect
on PF, ESIC etc.
Calculated as a percentage of basic pay, DA is given to offset the impact of
inflation. It is completely taxable and need to be declared while ITR filing. This
pay slip component typically features in case of government employees.
Conveyance Allowance:
This allowance is paid to individual to meet one's expenses in travelling from
his place of residence and workplace. Amount upto Rs 1600 per month is
exempted from taxation. For orthopedically handicapped the exemption limit is
Rs 3200 per month. Travel cost can be claimed for tax exemption under Section
10(5), twice in a block of four years. LTA covers only domestic travel, and the
amount is provided on submission of actual bills. It may not include food and
accommodation expenses during the course of the travel.
Medical Bills Reimbursement Allowance:

3. It is an allowance to cover the medical expenses of the employee while in
employment. For claiming reimbursement, you need to submit bills to your
employer. The expenses as mentioned in the bill should be in relation to the
consultation of doctor, medicines, medical tests etc.
House Rent Allowance (H.R.A):
It is paid to the employees for meeting the cost of renting a house. It also offers
tax benefits for the sum that they pay towards their accommodation every year,
hence can claim this exemption and reduce their tax liability.
Food / Canteen Allowance:
It is provided to meet the food expenses.
Special Allowance:
Special allowance is a fixed amount that is given to employees over and above
the basic salary in order to meet certain requirements. There is a taxable
allowance and an exempt allowance. Special allowance differs from company to
company. In some companies, it constitutes any allowance or benefit granted to
employees to meet specific expenses towards efficient performance of duties in
an office or employment of profit (as laid down in the IT Rules, 1962). If it is
specifically granted to employees, it is exempt to the extent of actual
expenditure incurred. However, in pay slips given to employees by some
companies, any number by the name of 'special allowance' is usually the
leftover component of the salary, after allocations are divided into basic, LTA,
transport allowance, HRA and so forth. Special allowance is, therefore, money
which does not fit into any other head in a salary slip or the residual factor.
After all the different components of a salary slip including benefits are
allocated, the remaining sum of money which makes up the annual CTC, forms
part of special allowance.
2. Deductions:
Professional Tax:
Professional tax is a tax levied on the income earned by salaried employees and
professionals, including chartered accountants, doctors and lawyers, etc. by to
the state government. Different states have varying methods of calculating
professional tax. The maximum amount that is payable in a year is Rs. 2,500.
Employers deduct profession tax at prescribed rates, from the salary paid to
employees, and pay it on their behalf to the State Government. The revenue
collected is used towards the Employment Guarantee Scheme and the
Employment Guarantee Fund.

4. This is payable only in the following states-Karnataka, West Bengal, Andhra
Pradesh, Telangana, Maharashtra, Tamilnadu, Gujarat, Assam, Chhattisgarh,
Kerala, Meghalaya, Orissa, Tripura, Jharkhand, Bihar, and Madhya Pradesh. It
normally amounts to just a few hundred rupees each month and is subject to
your gross tax slab.
This amount is deducted from taxable income.
Provident Fund (PF):
A scheme that benefits you after your retirement, the provident fund is an
investment which is made by you and the employer every month. It is a savings
platform that aids employees to save a portion of their salary each month, from
which withdrawals can be made following a month from the date of cessation of
service or upon retirement. The contributions are maintained by the Employees
Provident Fund Organization (EPFO). This amount is commonly calculated at
12% of your basic salary when it is up to Rs. 15000 and is directly transferred to
your PF account. In case it exceeds the given threshold amount, the company
may still choose to retain its share at 12% of Rs. 15000. One can choose to opt
out of the PF scheme. In case one opts out, one must make sure to invest it
regularly in better investment options.
Labour Welfare Fund:
Labour welfare fund is a statutory contribution managed by individual state
authorities. The state labour welfare board determines the rate of the
contribution and frequency of the contribution. The contribution and periodicity
of remittance differs with every state. In some states the periodicity is annual
(Andhra Pradesh, Haryana, Karnataka, Tamil Nadu.etc) and in some states it is
to be contributed during the month of June and December (Gujarat, Madhya
Pradesh, Maharashtra .etc.)
Income Tax:
The tax levied on one’s personal income is called income tax. Usually, an
employee gets his or her salary after the tax deduction by the employer. This
process is called as Tax Deduction at Source(TDS). The deducted tax amount is
paid to the government by the company.
LIC:
Many companies provide health insurance and life insurance to their employees,
the premium for which are borne by the employer and are therefore included in
the CTC.Hence, are deducted while calculating the net salary.
Other deductions:

5. These include deductions for managing community centers, co-operative
societies etc...
Conclusion:
After studying the salary slip or pay slip of the two employees it can be inferred
that there are three main fixed components of fixed salary which are basic
salary, DA and HRA. Basic salary is one’s base, fixed income. It does not
include bonuses, benefits or any other compensation from employers. DA is
provided to compensate for the inflation and HRA to meet the house rent. The
percentage (or proportion) of these three components were found to be different
for employees based on the policies of the organization they work for. It was
found that education sector employee got a Basic pay higher than the Net pay,
but has deductions that are aimed at investing their income in long term
insurances and provident fund and the marketing executive has been given more
allowances in form of conveyance and food and medical etc.
While comparing the deductions, it seems that education sector Employee has
got huge proportion as contribution to Provident Fund and other deductions like
contribution to credit society etc. and pays a higher amount as professional tax.
From the above derived data, it can be concluded that the employee working in
the marketing gets various perks in terms of allowances but has short term
investment opportunities while the latter has more investment in future part of
their life.