The document provides formulas and explanations for calculating various components of an employee's salary and benefits in India. It explains how to calculate monthly gross salary from annual CTC, basic salary as a percentage of gross, Dearness Allowance as a percentage of basic, and House Rent Allowance varying by city population. Formulas are also provided for calculating leave travel assistance, children education allowance, conveyance allowance, medical allowance, food coupons, special allowance, bonus, leave encashment, PF, ESI, EDLI, gratuity, pension, attrition, full and final settlement, professional tax, workmen's compensation, and performance linked bonus.

1. HR FORMULASHR FORMULAS

2. Salary Calculations
1. How monthly Gross is calculated?
– Annual CTC Base Pay divided by 12
2. How Basic is calculated?
– 35% to 45% of Gross Salary (depends on the
Co.’s policy). Most companies follow 40% of
Gross Salary.
3. How Dearness Allowance is calculated?
– Dearness allowance (D.A.) is part of a person's
salary. D.A. is calculated as a percent of the
basic salary. This amount is then added to the
basic salary. Rates vary as per rural/urban
areas etc.

3. Salary Calculations
• How House Rent Allowance (HRA) is
calculated?
– HRA – 50% of Basic (Chennai, Kolkatta,
Delhi, Mumbai )
– HRA - 40% of Basic if Population >
10lakhs & 10% of Basic if Population <
10 Lakhs (Other Cities)

4. Salary Calculations
• How Leave Travel Assistance is calculated?
– Leave Travel Assistance : 12%-13% Of Basic (Depends Of Co.’s
Policy)
• What is the Eligibility of Children Education Allowance?
– CEA : Rs. (200 Per Month)
• What is the Eligibility of Conveyance?
– Rs. 800 per month
• What is the Eligibility of Medical Allowance?
– Rs.15000/- P.A. (Till 15000/- Tax is not exempted)
• What is the Eligibility of Food Coupons?
– Food coupons are given from Rs.500 to Rs.1650/-(varies from co. to
co. according to employees levels)
• How Special Allowance is Calculated?
– Special allowances is calculated from: Monthly Gross –
(Basic+HRA+Conveyance+Food coupons+LTA+Children
Education+Medical Allowance+other allowances). Varies From Co. to
Co

5. Salary Calculations
• How Bonus is calculated?
– Bonus is calculated from a rate of 8.33% to a
maximum of 20%(employer’s wish) of an
employee’s salary or wage for the days he/she
has worked during that accounting year.
– Maximum Salary considered will be Rs.3500/-
per month
– If the basic exceeds Rs.10000/- bonus is not
applicable

6. Salary Calculations
• How Leave Encashment is calculated?
– Leave encashment is calculated
as below
a. In case of company:
Basic x no of leave balance
30
b. In case of factory:
Gross x no of leave balance
26

7. Salary Calculations
• How PF is calculated?
– PF:1. Employees share
PROVIDENT FUND 12% of basic
– 2. Employers share
12% of basic of which 3.67% goes to Provident fund and
remaining 8.33% goes to Pension fund
(PF is calculated on 12% of basic, where the maximum
deduction should be 780 or whichever is less- i.e. basic
should not exceed 6500/-)

8. Salary Calculations
• How Employee State Insurance (ESI) is
calculated?
– ESI – employees whose gross salary is
Rs.10000/- and below are eligible for ESI
– Employee’s share:1.75% on salary (gross)
– Employer’s share:4.75% on salary (gross)
• How Employees Deposit Linked Insurance
(EDLI) is calculated?
– Only Employer has to make contributions @ 0.5 %
of basic wage & dearness allowance

9. Salary Calculations
• How Gratuity is calculated?
– Gratuity is paid after 5 years of completion of
service
The amount does not exceed Rs 3,50,000/-
– Formula for calculating gratuity
– Salary (Basic + DA) x 15 days x No. of yrs
26
– Simple calculation= 4.81% of basic

10. Salary Calculations
• How Pension is calculated?
- Pension Amount =
(Pensionable Service (No. of Years) * Pensionable Salary )
70
• How Attrition is calculated?
- Resigned employee x 100
No. of existing employees
(done either monthly or yearly depending on the company)

11. Salary Calculations
• How Full and Final Settlement is calculated?
Payable to Employee:-
• Salary, Bonus, Leave encashment, Gratuity, Traveling expenses,
Sunday working day, Medical expenses reimbursement, Motor car /
scooter expenses
Receivable from Employee:-
• Advance against salary, Loan
Imprest ( Advance Money for e.g. for clothing, Accommodation,
and company will cut the money after 4 to 5 months from the
salary), Tour advance, Notice pay, Income tax, interest on loan
Payable minus receivables = FF S
• Always calculate amount of Notice period on Gross payment for
the month ( Basic+ other allowances which are paid in salary. )

12. Salary Calculations
• How Professional Tax is Calculated?
– Professional Tax is a state based Tax-
deduction is from the gross income
– Duration of deduction is half year
• 1st day of April to 30th September
• 1st day of October to the 31stMarch of a
year.
– PT is deducted slab wise-fixed by the state
government (it varies according to the salary
range)

13. Salary Calculations
• How salary is calculated?
– Salary is been calculated on the basis of
number of days in that particular month,
For January it will be 31 days, for April
would be 30 days and for February it
would be 28 or 29 days.

14. Workmen’s Compensation
• How WC is calculated?
- Case 1) Death of Employee – WC Eligibility is 50%
The calculation is – Check worker’s Age and his Factor
Maximum Wages x 50% x Factor
Maximum Eligibility for Fatal Injury - Rs.4,57,080
- Case 2) Permanent Total Disablement - WC Eligibility is 60%
The calculation is – Check worker’s Age and his Factor
Maximum Wages x 60% x Factor
Maximum Eligibility for Permanent Total Disablement - Rs.5,48,496
- Case 3) Temporary Total Disablement
First 3 days are excluded
The calculation will be No. of days – 3/15*25%
No. of days – 3 x 25%
15
Maximum Eligibility for Temporary Disablement - Rs. 2000 pm
up to a period of 5 years
- Case 4) Maximum Eligibility for Permanent Partial Disablement -

15. Performance Link Bonus
• How Performance Link Bonus is
calculated?
– For Eg:6 months and 50%
– PLB calculation is 50/100*6/12*Yearly
Bonus Eligibility of an employee
– Patricia