Trending @Accenture; While restructuring compensation plan after a promotion,is it a good option to keep max part as base pay or in optional section?Pls Advise
Ex-gratia can be allocated to any of the four components—Basic, Personal, HRA, or Other Allowance—or it can be directed towards NPS. • Basic: Increasing Basic pay will increase PF contribution, which reduces in-hand salary. However, this can still be beneficial since the employer must also contribute more towards PF. • Personal Allowance: This cannot exceed the amount in Base Pay, so flexibility here is limited. • Other Allowance: For maximizing in-hand salary, you can allocate more to Other Allowance. • NPS: If you opt for NPS, 14% of your Base Pay is contributed, which also lowers in-hand salary, but strengthens long-term retirement savings.
In short: • More Basic = Higher PF + Lower in-hand + More long-term savings • More Other Allowance = Higher in-hand • NPS = Lower in-hand + Retirement benefit
If you max benifits pf nps etc and ok take less take home...suggest to max out base pay..it decides the contribution but have to pay tax accordingly VP also decided on base pay not ctc..so no affect directly
Thanks for replying. Does this mean tax liability will be more? NPS and PF is dependent on basic I understand but I dont know if increasing basic in salary structure will attract more tax? Are you aware?
Yes same doubt
