This document provides an overview of typical compensation structures and benefits in organizations. It discusses components of compensation including base salary, allowances, variable pay, and annual guaranteed cash. It also outlines statutory deductions like provident fund and social security. Some common benefits are described such as group medical coverage, group personal accident insurance, and group term life insurance. Tax exemption possibilities for certain compensation elements are also mentioned.

1. Introduction: Compensation &
Benefits
T H E B A S I C S – C H A P T E R 1
B Y A N K U S H T A L W A R

2. Table of
Contents
1 Typical Compensation Structure
2 Tax Exemption Possibilities
3 Statutory Deductions
4 Benefits

3. Typical Compensation Structure in an
Organization
Base/Basic Salary (50% of AGC)
House Rent Allow. (50% of Base/Basic Salary)
Special Allowance (Balancing Figure)
Variable Pay – At Target (% of AGC)
Annual
Guaranteed
Cash
(AGC)
Annual
Total
Cash
Annual
Variable
Cash
Company PF Contribution
(@12% of Base/Basic)
Social
Security

4. Leave Travel Allowance 1 Month Base/Basic Salary
Telephone Reimbursement INR xxxx per month
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
Tax Exemption
Possibilities
Possible
Compilation of
Special
Allowance
(Balancing Figure)

5. • 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
Provident Fund
Employer-Employee Contributory Sch.
• Non-Mandatory scheme
• Existence depends on from Company to Company
• Employee Contribution : 15% of Base/Basic Salary
Superannuation
Defined Contribution Sch.
• 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
Gratuity
Payable after completion of 5 years
Statutory Deductions

6. Benefits : Introduction
Group Medical Coverage
• Health Insurance Plan
• Offered from Employers to Employees, which
covers employee's family as well
• Provides Risk Coverage to tide over difficult times
Group Personal Accident
• 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

7. Thanks