HRM Allowances and Deduction

Allowances:

Allowance are the special amount that is given to the employees over the basic salary to meet the certain requirements. Here we will see the different types of allowances including taxable allowance and liberate allowances.

Types of Allowances:

• Children education allowance
• Transport allowance
• Tribal area allowance
• Outstation allowance
• Travelling allowance
• Medical Allowance

Children Education Allowance:

This allowance is given to the employee for the education of his/her child. As per Indian govt. law the amount of the allowance is 100 per child for a maximum of 2 children in a family. For this allowance the child’s maximum age should be 20 years.

In India this CEA is paid to govt employees for the schooling and hostel facilities. Under the govt. law if the child is not a normal child, then the amount of the CEA is doubled compared to the normal child allowance.

Well as we discussed in India it is only paid to the govt. employee, but many other financially capable companies also provide CEA to their employees.

Transport Allowance:

The allowance is different in private and govt. sector. In govt sector the employee will get 800 per month and if the employee is physically not stable then the amount will be double which is 1600. As per private sector is different from company to company.

Tribal Area Allowance:

The employees who are working/posted in tribal area like Madhya Pradesh, Tamil Nadu, Uttar Pradesh, Tripura, Assam, West Bengal, Bihar, and Orissa will get the Tribal Area Allowance which is taxable. The tax exemption is allowed up to 200 per month.

Outstation/Travelling Allowance:

The allowance that any employee will get as the travelling allowance or outstation allowance which includes the tour, or if any employee is going out of the station from the company for vacation or trip the allowance will be paid to the company. Which is different from company to company.

Medical Allowance:

The allowance that is paid to the employee every month for the need of medical expenses. This amount is included into the employee’s total salary. The company provides the medical allowances every month whether the employee or his/her family is in need finance for medical help or not.

Note:

There are many other allowances that company provides in India as well as in other countries. It is different from company to company depending on the company’s policy.

Deduction:

The salary of an employee which comes with many allowances as well as lawful deduction too. The deduction may vary from company to company but there are some of common deduction which are mentioned below.

1. TDS (Tax Deduction from Source):

   This tax is called Income Tax Deduction from and employee’s salary as well as it can be also deducted from other payments to minimize the tax amount eventually. The amount is decided by the government and vary from country to country.

2. PF (Provident Fund):

   Provident fund is the amount and beneficiary which will help and employee after his retirement. The amount will be divided in two form EPF (Employees’ Provident Fund), EPS (Employees’ Pension Scheme.). The contribution of fund will be from both sides. Employees’ side as well as the Employer’s side too. The current contribution measurement that is mentioned below.

   	Employee	Employee
   EPF	12 % of gross	3.67%
   EPS	0	8.33%
   Total contribution	12%	12%

3. ESI (Employees’ State Insurance):

   The purpose of this deduction is to secure the healthcare of the employee. This law will be implemented in company which have 10 or more employee in the organization. The contribution of both employee and employer is mentioned below.

   Contribution	% of Gross pay
   Employees’ contribution	0.75
   Employer’s contribution	3.25

4. PT (Professional Tax):

   Professional Tax is the amount deducted from any person participation in any profession such as Accountant, Company Secretory, Layer, Doctor, or any corporate office employee. The person who is earning money on salary base government of India will be collection this money known as PF. The amount of deduction is mentioned below as per Indian Govt. norms.

   Monthly salary in Rs.	Tax in Rs. (Per month)
   Up to Rs. 5,999	Nill
   Rs. 6,000 to Rs. 8,999	Rs. 80
   Rs. 9,000 to Rs. 11,999	Rs. 150
   Rs. 12,000 and above	Rs. 200

   This were the basic deduction which eventually helps employee to minimize the tax and helps in health care and other retirement benefits too. There are many other deductions too which are vary as per company policy and country to country.