Hi Guys
I have just joined this forum. I am a Non Resident based in Australia since 86 . I have recently set up an IT Company in India and have just started with 2 employees. One employee is getting paid Rs 20,000 pm and the other one Rs 13,000 pm.
Can somebody please tell me how to structure their Salary ie Basic , HRA , conveyance etc ? so that they have very little or no tax liability.
Can somebody also enlighten me on TDS, PF and ESI issues in relation to the above ? :confused: I do not want to avoid my legal obligations.
I have been paying them the above amounts without making any deductions etc . First Salary was paid in April 08. :!:
Any help, ideas and suggestions would be highly appreciated. I am totally out of touch with the Indian System.
Cheers and have a nice day

From Australia , Perth
Hello Mr. Rajiv,
As regards TDS, there will be deduction as per I.Tax deptt. guidelines. For this, you can consult Tax-payer guide or a C.A.
Regarding PF, if the gross salary is more than Rs. 6,500/- it is optional on part of the employees whether they wish to subscribe for PF. For that,you will have to take PF registration number if the no. of employees is 10 or more.
NO ESI will be deducted if salary more than Rs. 10 K.
If you wish to save ataxable income, keep the basic salary to the minimum, and give your employees perks in form of reimbursements like Taxi for conveyance, medical reimbursement (Upto a max. of Rs. 15 K per annum), LTA if taken once ina block of 2 years, is exempted from tax - two months basic.
Prakash Dixit

From India , Delhi

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