The document discusses various components of compensation including fixed pay, variable pay, perks and benefits, and bonuses. It also covers tax implications related to compensation, explaining concepts like provident fund, income tax, and taxable income. Finally, it provides examples of how to structure compensation and calculate taxable income and taxes.

1. Compensation
&
Tax Implications

3. Compensation
Fixed
Part A
Part B
Part C
Variable
Part D
Perks /
Benefits
Part F
Bonus
[Retention/
Joining
Part E
Comp Structure

4. Compensation
Fixed
Part A
Part B
Part C
Understanding Structure
[Basic Wages]
Basic & DA
[Retirals]
PF & Gratuity
[Choice Pay]
Reimbursements

5. Compensation
Variable
Part D
Understanding Structure
[Performance
Linked Payments]
Incentives

6. Compensation
Perks / Benefits
Part F
Bonus [Retention/ Joining
Part E
Understanding Structure
One / Multiple
time bonuses Non Cash
Benefits

7. Smart Analogy

8. Whirlpool

9. IBM X Changing Solutions

10. Capita I-Gate

11. “Tax Implications”
Way to invest wisely

12. Tax
Implications
Provident
Fund
Income Tax
Taxable
Income
Exercises
Calculation :
Taxable
Income
Designing
Compensation
Calculation In
hand Salary
Investments
Popular
Investment
Options
Index

13. All you want to know about PF
• Employees’ Provident Fund Scheme, (EPF)1952
• Employees’ Deposit Linked Insurance
Scheme,(EDLIS) 1976
• Employees’ Pension Scheme, 1995 [EPS]
(replacing the Employees’ Family Pension
Scheme, 1971)

15. Smart Facts about PF
• Not compulsory for all
• Your EPF account does not earn compounded interest each year
on the total monthly contribution.
• Withdrawing EPF during job change illegal
• Can be withdrawn on special occasions
• Allows voluntary contribution
• Every employee had a PF account number which was
associated with the employer. [Till Oct 2014 ]

16. Smart Facts about PF
• Change of job meant another Provident Fund number
• It involved transferring from one account number to another.
• EPFO has launched a Universal Account Number (UAN)
• UAN card download, member passbook download, updation of KYC
information, listing all his member ids to UAN, file and view transfer
claim.
• The employer contribution is exempt from tax and employee’s
contribution is taxable but eligible for deduction under section 80C of
Income tax Act.
• Those who started job after 1 Sep 2014 and earning more than
15,000 Rs in basic and DA will not be contributing to the EPS or
Pension scheme.

17. Options available with Organizations

18. PF Calculation [Basic Salary >RS.15,000/-]
Option - 1
Contribution Towards Calculation Amount
EPF Employees share 20000 x 12% 2400
EPS Employer share 15000 x 8.33% 1250
EPF employer share 20000 x 12% (-) 1250 1150
EDLI charges 20000 x 0.5% 220
EPF Admin charges 20000 x 1.1% 220
EDLI Admin charges 20000 x 0.01% 2

19. PF Calculation [Basic Salary >RS.15,000/-]
Option - 2
Contribution Towards Calculation Amount
EPF Employees share 20000 x 12% 2400
EPS Employer share 15000 x 8.33% 1250
EPF employer share 15000 x 3.67% 550.5
EDLI charges 15000 x 0.5% 75
EPF Admin charges 15000 x 1.1% 165
EDLI Admin charges 15000 x 0.01% 1.5

20. PF Calculation [Basic Salary >RS.15,000/-]
Option – 3
Contribution Towards Calculation Amount
EPF Employees share 15000 x 12% 1800
EPS Employer share 15000 x 8.33%
1249.5(round
ed to 1250)
EPF employer share 15000 x 3.67%
555.5
(rounded to
555)
EDLI charges 15000 x 0.5% 75
EPF Admin charges 15000 x 1.1% 165
EDLI Admin charges 15000 x 0.01% 1.5

21. Employees’ Pension Scheme (EPS)
• Offers pension on disablement, widow pension, and pension for
nominees.
• Superannuation Pension: Member who has rendered
eligible service of 20 years and retires on attaining the age of 58
years.
• Retiring Pension: member who has rendered eligible service
of 20 years and retires or otherwise ceases to be in employment
before attaining the age of 58 years.
• Permanent Total Disablement Pension
• Short service Pension: Member has to render eligible
service of 10 years and more but less than 20 years.

22. Employees Deposit Linked Insurance
Scheme (EDLIS)
• It provides life insurance cover to the PF members.
• The cost of the scheme is borne by the employer
• Amount of life coverage under this statutory scheme is very low
(a maximum amount of Rs. 60,000, which has increased to 3
lacs)
• Employer is not liable for EDLIS contribution if they manage
employee insurances separately

23. Basic Tax Jargons
1. Financial Year (FY) [2014-15] – Income Earned
2. Assessment Year (AY) [2015-16] – Income Assessed
3. Previous Year (PY) [2014-15]

24. Easy Steps to Calculate your Tax
1
• Calculate your Gross Total Income
2
• Calculate your Net Deductions
3
• Calculate Taxable Income
4
• Calculate your Tax Payable on taxable income
5 • Add Education Cess of 2% + Higher Education Cess 1%

25. Income Tax Slab For Financial Year 2014-15
General (M/F) Senior Citizen [60 to 80] Income Tax
0-250000 0-300000 No Tax
250000-500000 300000-500000 10%
500000-1000000 500000-1000000 20%
Above-1000000 Above-1000000 30%

26. Investments
▫ Smarter way to save Taxes
▫ Ensures and Knit the “Security Net”

27. Popular Investment Options
For Tax exemption
▫ Section – 80 C
 Section – 80 CCC [LIC Annuity Plan / Pension Fund]
 Section – 80 CCD(1) [National Pension Scheme- Employee]
 Section – 80 CCD(1B) [National Pension Scheme- Employee]
 Section – 80 CCD(2) [National Pension Scheme - Employer]
 Section – 80 D [Medical Insurance]
 Section – 80 E [Loan for Higher Education]
 Section – 80 GG [HRA]
▫ Section – 24 [Home Loan]
▫ Section – 10 (13A) [HRA]

28. How much do we understand
Section 80

29. Deduction for the interest that you pay on your home
loan
[Limit: Rs.2,00,000/- for Self occupied property]
[No Cap on property that is not self-occupied]
Deductions – Home Loan Benefit u/s 24

30. 1. Actual HRA
OR
2. Actual rent paid by you minus 10% of your basic salary
and other allowances (excluding HRA)
OR
3. 50% of your basic salary [Metro] / 40% [Non Metro]
Deductions – HRA [Section 10(13A)]

31. Exercise – 1
Calculation of Taxable Income
&
Payable Income Tax

32. Exercise – 2 & 3
Designing Compensation Structure
&
Calculation of Taxable Income

33. Do You Know..??
▫ Gratuity – 4.81% [Why]
▫ Difference b/w last year & this Year
investment plans
▫ LTA [Twice in 4 Years]
▫ Slab for Super Senior Citizens
▫ Can HRA & Home loan benefit could be
availed simultaneously
▫ Whether PAN of the Landlord is mandatory
for HRA claim – What’s the limit
▫ Is producing Rent Receipts necessary for
claiming HRA