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HR FORMULAS
FORMULAS
Salary Calculations
1. How monthly Gross is calculated?
– Annual CTC Base Pay divided by 12
2. How Basic is calculated?
– 35% to 45% of Gross Salary (depends on the
Co.’s policy). Most companies follow 40% of
Gross Salary.
3. How Dearness Allowance is calculated?
– Dearness allowance (D.A.) is part of a person's
salary. D.A. is calculated as a percent of the
basic salary. This amount is then added to the
basic salary. Rates vary as per rural/urban
areas etc.
Salary Calculations
• How House Rent Allowance (HRA) is
calculated?
– HRA – 50% of Basic (Chennai, Kolkatta,
Delhi, Mumbai )
– HRA - 40% of Basic if Population >
10lakhs & 10% of Basic if Population <
10 Lakhs (Other Cities)
Salary Calculations
• How Leave Travel Assistance is calculated?
– Leave Travel Assistance : 12%-13% Of Basic (Depends Of Co.’s
Policy)
• What is the Eligibility of Children Education Allowance?
– CEA : Rs. (200 Per Month)
• What is the Eligibility of Conveyance?
– Rs. 800 per month
• What is the Eligibility of Medical Allowance?
– Rs.15000/- P.A. (Till 15000/- Tax is not exempted)
• What is the Eligibility of Food Coupons?
– Food coupons are given from Rs.500 to Rs.1650/-(varies from co. to
co. according to employees levels)
• How Special Allowance is Calculated?
– Special allowances is calculated from: Monthly Gross –
(Basic+HRA+Conveyance+Food coupons+LTA+Children
Education+Medical Allowance+other allowances). Varies From Co. to
Co
Salary Calculations
• How Bonus is calculated?
– Bonus is calculated from a rate of 8.33% to a
maximum of 20%(employer’s wish) of an
employee’s salary or wage for the days he/she
has worked during that accounting year.
– Maximum Salary considered will be Rs.3500/-
per month
– If the basic exceeds Rs.10000/- bonus is not
applicable
Salary Calculations
• How Leave Encashment is calculated?
– Leave encashment is calculated
as below
a. In case of company:
Basic x no of leave balance
30
b. In case of factory:
Gross x no of leave balance
26
Salary Calculations
• How PF is calculated?
– PF:1. Employees share
– 2. Employers share
12% of basic of which 3.67% goes to Provident fund and
remaining 8.33% goes to Pension fund
(PF is calculated on 12% of basic, where the maximum
deduction should be 780 or whichever is less- i.e. basic
should not exceed 6500/-)
Salary Calculations
• How Employee State Insurance (ESI) is
calculated?
– ESI – employees whose gross salary is
Rs.10000/- and below are eligible for ESI
– Employee’s share:1.75% on salary (gross)
– Employer’s share:4.75% on salary (gross)
– Patricia