Request for Guidance on Salary Structure Components

Ask the Community Payroll
1

Hi Everyone,

We’re currently working on creating a detailed salary structure and would really appreciate your help with the following:

  1. State-wise Minimum Wages – Especially for semi-skilled employees across all Indian states.
  2. Professional Tax (PT) – State-wise applicability and calculation methods.
  3. Statutory Bonus – Is it mandatory for all companies? If yes, what are the eligibility criteria and on what basis/percentage should it be calculated?
  4. Labour Welfare Fund (LWF) – State-wise contribution rates and applicability.

If anyone has a ready reference calculator, document, or can assist us with these queries or any related insights, we’d be very grateful!

7 Likes
3

Hi @ruchi.tambi ,

Here’s a detailed overview addressing each of your points:

1. State-wise Minimum Wages for Semi-Skilled Employees

Minimum wages in India are determined by both Central and State Governments and are subject to periodic revisions. These wages vary based on the nature of employment, skill level, and geographical location.

For instance, as of April 2025:

  • Delhi: ₹20,371 per month
  • Goa: ₹12,298 per month
  • Bihar: ₹11,440 per month
  • Haryana: ₹11,820 to ₹12,410 per month (based on zones)
  • Assam: ₹11,736.80 per month

For a comprehensive list, you can refer to the Chief Labour Commissioner’s official website or Simpliance’s Minimum Wages page.CLC+2CLC+2Simpliance+2

2. Professional Tax (PT) – Applicability and Calculation

Professional Tax is a state-imposed tax on individuals earning income through employment or practicing professions. The applicability and rates vary across states.ClearTax+13Zoho+13greythr+13

Here’s a snapshot of PT rates for select states:

For detailed state-wise PT slabs, refer to TaxGuru’s comprehensive guide.payhr.in+4Tax Guru+4Tax Guru+4

3. Statutory Bonus – Applicability and Calculation

Under the Payment of Bonus Act, 1965, employers are mandated to pay bonuses to employees earning up to ₹21,000 per month, provided they have worked for at least 30 days in the accounting year.India Briefing+6Zoho+6Hivepayroll+6

  • Bonus Rate: Minimum 8.33% and maximum 20% of the salary or wage.Zoho+4HRStop+4CLC+4
  • Calculation Basis: The bonus is calculated on the lesser of the actual salary or ₹7,000 per month or the minimum wage for the scheduled employment, whichever is higher.

For example, if an employee earns ₹15,000/month and the applicable minimum wage is ₹7,000:

Detailed guidelines can be found on Paisabazaar’s Statutory Bonus page.Paisabazaar+1Paisabazaar+1

4. Labour Welfare Fund (LWF) – Applicability and Contribution Rates

The Labour Welfare Fund is a statutory contribution managed by individual state authorities, aimed at providing welfare facilities to workers. The applicability, contribution rates, and periodicity vary across states.AscentHR+3payhr.in+3ClearTax+3

For instance:

  • Maharashtra:
  • Karnataka:
    • Employee Contribution: ₹20 (annual)
    • Employer Contribution: ₹40 (annual)

Note: Not all states have implemented the LWF Act.greythr+5AscentHR+5ClearTax+5

For a detailed state-wise breakdown, refer to PayHR’s LWF guide.Tax Guru+3payhr.in+3payhr.in+3

Additional Resources:

Feel free to reach out if you need further assistance.

I hope this helps answer your query. Open to more suggestion/inputs from other community members, incase I have made any errors.

Trisha.

5 Likes
4

Hi everyone! :waving_hand: @ruchi.tambi ,

There’s been a lot of discussion around building compliant salary structures—especially when it comes to components like EPF, PT, ESI, LWF, Bonus, and more. Here’s a complete reference post for anyone working on this in their organization.

:bar_chart: Sample Salary Structure Template (with Compliance)

Component Formula / Notes
Basic Salary Fixed or % of CTC
HRA (40% or 50% of Basic) = Basic * 0.40 (non-metro) or 0.50 (metro)
Conveyance Allowance ₹1,600 fixed or variable
Special Allowance = Gross - (Basic + HRA + Conveyance)
Gross Salary Sum of earnings
EPF – Employee (12% of Basic) Statutory deduction
EPF – Employer (13% of Basic) Employer share + admin charges
ESI – Employee (0.75% of Gross) If Gross < ₹21,000
ESI – Employer (3.25% of Gross) If Gross < ₹21,000
Professional Tax (PT) As per state slab
Labour Welfare Fund (LWF) State-specific contribution
Net Pay Gross - (EPF + ESI + PT + LWF)

:receipt: Old vs New Tax Regime – How it Affects Salary Components

Component Old Regime New Regime (2024–25)
Basic Salary Taxable Taxable
HRA :white_check_mark: Exempt (based on rent & city) :cross_mark: Not exempt
Conveyance Allowance :white_check_mark: ₹50,000 standard deduction :white_check_mark: ₹50,000 standard deduction
Special Allowance Taxable Taxable
EPF (Employer Share) :white_check_mark: Exempt (up to 12%) :white_check_mark: Exempt (up to 12%)
Bonus Taxable Taxable
PT / LWF / ESI :white_check_mark: Deducted, not taxed :white_check_mark: Deducted, not taxed

:pushpin: In the new regime, most exemptions/deductions are removed, except for standard deduction and employer PF.

:abacus: Useful Templates & Calculation Tools

Here are some handy references and calculators to simplify the number crunching:

:white_check_mark: Statutory Bonus Calculator

:white_check_mark: Professional Tax (PT) Slab Reference

:white_check_mark: Labour Welfare Fund (LWF) Contribution Rates

:white_check_mark: Minimum Wages Reference (State-wise)

Hope this helps HR pros and teams build accurate and compliant salary frameworks! :glowing_star:

Rakesh.

3 Likes
5

Sure! Here’s a short breakdown of key salary structure components:

  1. Basic Salary – Fixed part of the salary; basis for other components.
  2. House Rent Allowance (HRA) – Allowance for accommodation expenses.
  3. Dearness Allowance (DA) – Cost of living adjustment (mainly for govt. employees).
  4. Conveyance Allowance – Travel expense reimbursement.
  5. Medical Allowance – Medical expenses coverage.
  6. Special Allowance – Additional fixed pay (non-categorized).
  7. Performance Bonus/Incentives – Based on employee performance.
  8. Provident Fund (PF) – Retirement benefit (12% from employee & employer).
  9. Professional Tax – State-levied tax deducted from salary.
  10. Gratuity – Long-term service benefit (after 5+ years).
  11. ESI – Employee State Insurance for medical benefits (if applicable).
6 Likes
6

Hi, could you pls help on the special allowance breakup for tax exemption. salary structure are eligible for tax exemptions, and what are their respective limits?

3 Likes
7

Special Allowance is not a regular component. You can ignore that.

3 Likes
8

Standard deduction will be ₹75000 for new regime

1 Like
9

Hi everyone!

PLS TELL THE FACTORY RULES

3 Likes
10

Hi @MSR ,

When you say “factory rules,” are you referring to standard workplace rules and policies typically followed in a factory or manufacturing environment? If yes, here are some common factory rules that ensure safety, efficiency, and discipline:

Common Factory Rules:

  1. Safety First:
    Always wear required personal protective equipment (PPE) like helmets, gloves, goggles, and safety shoes.
  2. Follow Work Instructions:
    Adhere strictly to operational procedures and machine guidelines.
  3. No Unauthorized Access:
    Only authorized personnel allowed in specific areas.
  4. Maintain Cleanliness:
    Keep your work area tidy and dispose of waste properly.
  5. Report Hazards:
    Immediately report any unsafe conditions or incidents to supervisors.
  6. No Smoking or Alcohol:
    Smoking, alcohol, and drug use are strictly prohibited within the factory premises.
  7. Attendance and Punctuality:
    Be on time and report absences in advance.
  8. Proper Use of Tools and Machines:
    Use equipment only for its intended purpose and report any malfunction immediately.
  9. No Loose Clothing or Jewelry:
    To avoid accidents, avoid wearing loose clothing, jewelry, or anything that can get caught in machinery.
  10. Emergency Procedures:
    Familiarize yourself with emergency exits, fire extinguishers, and first aid kits.

I hope this helps.

Trisha

4 Likes