"Frequently asked questions by HRMS."

Regular wages received by an employee from an employer on a weekly, biweekly, or monthly basis is called as salary. Many salaries also include such employee benefits as health and life insurance, savings plans, and Social Security. Salary income is taxable by the federal, state, and local government, where applicable, through payroll withholding.

Allowances are fixed sums of money paid regularly in addition to salary. An amount that is allowed or granted is called as Allowance. There are three types of allowance. Taxable allowance, partially Exempted allowance Fully - exempted allowance

Permanent account number is a unique identification number by which the Income Tax Department identifies any assessee. PAN consist of ten alpha numeric characters, and has to be taken by every individual who is employed. This is a mandatory requirement before submitting the annual income statement to the Income Tax Department.

From the House Rent Allowance (HRA) received as part of salary during the year, least of the following three amounts is exempted from tax (or not included in income): HRA allowance actually received Rent paid -10% salary (Basic + DA forming part of salary + commission as a % of turnover) 40% of salary (50% for Metro city)

Transport allowance for traveling from residence to work place up to Rs 800 per month is exempted. For a person with physical disability the amount is Rs. 1600.

Children Education Allowance is exempted up to Rs. 100/- per month per child up to a maximum of 2 children.

Any amount that company spends for the benefit of its employee can be calculated under Cost to Company. Along with salary, CTC may include medical insurance, accident policy, subsidized lunch / food, any attire / apparel / furnishing allowance etc., PF, Gratuity.

PF, ESI, PT and TDS are considered as Statutory Deductions that are to be deducted from salary.

PF means Provident Fund. It is like a pension and Insurance; a part of your salary is deducted every month and deposited in your Provident Fund Account. If you are working in a private company then the company pays the same amount as it is deducted from your account and when you leave the company you can apply and withdraw the amount. It's your personal saving. If you are a government employee then you will get your saved PF of your whole life of your service when you retire. PF amount which is accumulated in the PF Fund is also transferable. Employee can transfer his/her PF account, if the employment changes from one company to company.

The ESI Act has been passed to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provisions for related matters. As the name suggests, it is basically an insurance scheme i.e. employee gets benefits if he is sick or disabled.

Wage-limit for coverage under the Act, is Rs.15, 000/- per month (this is monthly salary including all allowances)

Profession tax is a state specific tax. Every state will have a slab of rates. PT is collected on profession, trades, and callings or holds any appointment public or private or is employed in any manner in the state for the benefit of the state. Every employee has to pay profession tax based on his earning. Employer deducts the tax from the salary and remits to state government account every month in the specified form. PT differs from state to state. Some states never comes under the PT The payment term also differs from state to state.

Gratuity is a retirement benefit given by an employer to an employee. It is paid for employees at the time of leaving, as a gratitude for the service employee has rendered, provided that the employee has served the company more than 5 years. Gratuity is paid for a retiring employee as well as the employee who is leaving after completing 5 years of service in a company.

TDS means Tax Deducted at Source. In the payroll perspective, deducting the income tax of employee to be paid to the government from employee's salary is TDS. The employer has to deduct and remit the full tax arising out of employee's salary. For this, employer has to make the estimation at the beginning of the financial year as to what would be the probable income and income tax for each employee based on the earnings, deductions and investments proposed to be made by such employees. This total tax is to be deducted from their salaries over the 12 months between April and March.

TAN is Tax Deduction & Collection Account Number. For filing the TDS, organization must have a TAN Number.

It includes employee's earnings, deductions, tax etc. Or in simpler words, it is a basic reference document for information and transparency on the monthly financials between employee and employer.

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