Defining Salary Structure - Last Part

Well to continue the series on defining salary structure, i am making effort to explain to all the newbies about the salaries and how they are structured. This is as you can make out the last part in series, you can always ask me if you can't see something here that you need defined. You can also read the Part 1 and Part 2 on this blog.

Employee Stock Options - These are basically designed for retaining employees in the company and are commonly known as ESOP. The company gives you either free shares or gives you an option to buy shares at a discounted price if the employee decides to stay with the company for a fixed period. And of course if you hold the shares for more than a year, no capital gains tax is applicable to you.

Bonus - It is a part of your CTC, which is usually given once a year in lumpsum based on your and the companies overall performance. It is taxable as a part of the salary. In some companies this amount is also variable depending on your performance and your meeting your Key Result Areas.

Gratuity - It is the Lump sum amount paid by the company, when you either retire or resign from the company. Of course for it to be paid you need to have worked in the company for atleast 4-5 years. Gratuity can be calculated by

Gratuity = Last drawn salary x 15/26 x No. of years of service

Well that's about it, as far as i can think of and of course you are free to write to me about anything else you came across and i will try to define it also.

Related Posts

Defining Salary Structure - Part 1

Defining Salary Structure - Part 2

Compare New and Old Income Tax Slabs

Income Tax Calculation Form


Anonymous said...

Thanks for the articles. They are helpful in understanding details as I plan out my move to India,

Anonymous said...

that sounds like a very good explanation. Can you suggest some books that will help me master the area.

Anonymous said...

Hi There,

Your articles have been a great help to me who hardly had an idea based on what was the salary calculated and how they are divided. I would like to know how can I save my sal from the Tax. Give opinion please!