CTC ppt.pptx

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    COMPENSATION & CTC

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    WHAT IS COMPENSATION?

    Compensation is the

    remuneration received by an

    employee in return for his/hercontribution to the

    organization. It is an organized

    practice that involves balancing

    the work-employee relation byproviding monetary and non-

    monetary benefits to

    employees.

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    COMPENSATION

    EMPLOYEE

    COMPENSATION

    EXECUTIVE

    COMPENSATION

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    EMPLOYEE COMPENSATION

    Compensation of employees (CE is measured by thevalue of the remuneration in cash or in kind which an

    employee becomes entitled to receive from an employer

    in respect of work done! during the relevant accounting

    period - whether paid in advance! simultaneously! or in

    arrears of the work itself.

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    EXECUTIVE COMPENSATION

    E"ecutive Compensationishow top executives ofbusiness corporations are

    paid. This includes a basicsalary, bonuses, shares,options and other companybenefits.

    It has become integral part of

    management.

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    Aims of Employee Compensation

    Attract capable employees to the

    organization.

    otivate them toward superior

    performance.

    !etainment of their services over an

    extended period of time.

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    COMPENSATIONINCLUDES

    DIRECT

    PAYMENT

    INDIRECT

    PAYMENT

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    salary

    Basic + DA+

    Commission etc

    Normal components

    Allowances

    Perquisites

    Taxable

    To

    employee

    Fringe

    Benefit tax

    Taxable

    To Employer

    Applicable

    To companies

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    COMPENSATION

    Be Adequate - must work to

    ttr!t "# r$t%" st %"t'os$ r$s w'$r$ t'$%"t$r"t%o"( or)"%*t%o" 's

    t'$ )r$t$st "$$#s "#o++ortu"%t%$s,

    Be Cost Efective- s'ou(#.!%(%tt$ tr"s.$r o.%"t$r"t%o"( $m+(o/$$s %" t'$most !ost-$$!t%0$ m""$r .ort'$ 1rm "# 2$ $s to

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    Be Motivating - s'ou(# 2$

    su4!%$"t to mot%0t$$m+(o/$$s to '%)'+$r.orm"!$ ($0$(s "#

    r$%".or!$ #$s%r$# 2$'0%ors,

    Be Equitable - $m+(o/$$s

    s'ou(# 2$ m#$ to .$$( t't!om+$"st%o" s/st$m %s$5u%t2($3 E6t$r"( & I"t$r"(E5u%t/,

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    I"T!#$%CTI#" #& CTC

    Cost to Company 'CTC( is a term used to

    describe an investment without return.

    Cost to Company can also be used to refer

    to the total cost that an organization isspending towards their employee including

    the )alary, *er+s, Cost related to benefits,

    Cost related to hiring, Training, !etirals,)tatutory Contributions etc.

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    CTC is simply the money given to you the money

    spent on you

    Includes both monitory and non-monitory.

    asic $A *erformance lin+ed pay onus /!A Allowances !eimbursements 0TA *er+s *er1uisites )ocial benefits 'li+e *&,2ratuity, )uperannuation( Insurance edical

    !eimbursements Training costs ealcoupons Transport Club membership fees other subsidies 3.

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    asics

    2ross )alary4 is salary before deductions

    "et )alary4 is what you get after deductions

    $eductions 4 *& Taxes 0oans etc.

    CTC 4 CTC means Cost To Company

    Cost to company 'CTC( is the total cost that

    an employee is incurring in a company.

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    Judge the benefits holistically!

    Your tk$-'om$ +/

    P/ .or P$r.orm"!$

    A((ow"!$s

    7$%m2urs$m$"ts

    PF

    8rtu%t/

    Su+$r""ut%o"

    Post r$t%r$m$"t'$(t' 2$"$1ts

    So!%( s$!ur%t/m$sur$s (%k$2$"$0o($"t .u"#s

    Tr%"%") to %m+ro0$/our k"ow($#)$ &sk%((

    O"-9o2 ($r"%")

    Em+(o/$$ sto!ko+t%o"s

    H$(t' %"sur"!$

    M$#%!( 2$"$1ts

    S'ort T$rm Lo")-t$rmM$#%um T$rm

    Com+$"st%o" %s (w/s!om+r$'$"s%0$:

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    Components of Cost to Company 'CTC(

    )alary

    asic

    5$earness Allowance '$A(

    5Incentives or bonuses

    5Conveyance allowance

    5/ouse !ent Allowance '/!A(5edical allowance

    50eave Travel Allowance or Concession '0TA 6

    0TC(57ehicle Allowance

    5Telephone 6 obile *hone Allowance

    5)pecial Allowance.

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    asic salary

    asic salary is a fixed component of your ta+e-home

    pay for the wor+ you do8

    It is also the base of computations of other benefits li+e

    *&, 2ratuity, 0TA and sometimes /!A

    It is taxable and best if it is be around 9:; of CTC.

    The paradox here is higher ratio of basic salary means

    more tax and low ratio means impact on socialbenefits li+e *& and 2ratuity etc.

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    Allowance

    Allowances paid to the employee

    irrespective of the expenditure incurredunder the head of allowances.

    a

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    $earness Allowance

    It is the allowances is paid to neutralize impact

    of Inflation.

    This is something li+e ma+ing cost-of-living

    ad

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    /ouse !ent Allowance

    /!A is usually a ma

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    /!A and tax exemptions

    ?ou must have /!A component in your salary

    ?ou must be paying rent

    ?our spouse shouldn@t be the owner of the house

    ?ou are not allowed to pay rent to your spouse and get tax

    exemption8 /owever, you can do claim tax exemption if you pay

    rent to your parents or your relatives.

    Amount eligible for tax exemption which ever is lowest of the

    following B conditions

    >. In etros '$elhi , umbai,ol+ota and Chennai( =:; of

    annual salary, for rest of India 9:; of annual salary

    D. Actual /!A !eceived from the company

    B. The amount of rent actually paid in excess of >:; of annualsalary

    )alary means asic $A *erf. 0in+ed bonus . 'Allowances and

    per1uisites to be removed(

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    Conveyance Allowance

    Transport allowance is paid to meet traveling

    expenses from residence to office

    Amount up to !s :: per month '!s. F,G:: per year( is

    tax exempted no need to produce receipts.

    City compensatory allowance

    *aid to compensate the costs involved in a city life8

    Taxable

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    0eave Travel Allowance

    0TA is for Travel with your family ')elf,

    )pouse and Children (to any place in India

    The tax implication in layman@s language is

    simple ,Tax exempted if you provide proof of

    travel and expenditure else taxable

    Two 0TAs in a bloc+ of four years is allowed

    for tax exemption.

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    *ay for *erformance6Incentives

    *ay for performance organizations give

    a part of the salary as pay forperformance

    The periodicity of payment may differfrom company to company

    The amount received under this head istaxable

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    onus

    onus payment in many organization is governed by

    *ayment of onus act >FG=,India

    %sually paid once an year, mostly profit sharing with

    employees by the company some times as a percent of

    basic to all employees or may be based on employeeHs

    performance and contribution

    There can be many types 3.here are few3 *rofit 6 2ain sharing

    &estival bonus

    oining bonus

    !etention bonus

    Employee referral bonus

    onus is Taxable

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    !eimbursements or Claims

    !eimbursement of certain expenses li+e *hone,

    obile, Internet etc.

    !eimbursements are Tax free.

    If you are entitled to !est. D::: obile expences,

    and you have a bill of !est. >:::, ?ou will get only!s.>,:::.

    !emember it is an reimbursement not an

    allowance8

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    edical !eimbursement

    edical expenditure incurred on self or

    dependants

    Amounts up to !s.>=,::: per is not

    Taxable sub

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    Children Education allowance

    Children Education Allowance is *aid to aid

    children@s education. !s D,9:: per year is tax-free.' !s.>:: *er

    month per child up to D children(

    Children /ostel allowance 4

    !s J,D:: per year is tax-free.' !s.B:: *er

    month per child up to D children(

    & i b fi

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    &ringe benefits

    /umanistic consideration 4 education, health,

    housing )tatutory 4 canteens, rest sheds, crKche,

    maternity, paternity,

    )ecurity 4 2ratuity, *&, *ension, edical

    /azard of industrial life 4 E)IC, wor+mencompensation act, /ospitals

    Tax considerations 4 transport, interest freeloans, loans at concessional rates

    %tilization of leisure time 4 holiday homes,foreign trips, guest houses

    Inculcating a sense of involvement 4concessional lunch, subsidized picnics

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