Earning Components

Earnings are the total compensation earned by the employee as monthly salary in cash or at their bank accounts. Earnings are direct benefits received from the employer and are taxable. Earning components or salary components are structured by the employer to arrive at their employee’s gross monthly salary. Salary components are calculated based on the employee’s CTC.

To view the Earnings, navigate to settings > Payroll settings > CTC Components> Click on Earnings.

There are around twenty plus important earning components readily available in the OfficePortal by default for the use of salary calculation.

The following are the most common “Earning (or) Salary components”,

• Basic
• House Rent Allowance (HRA)
• Conveyance Allowance
• Transport Allowance
• Travelling Allowance
• Bonus
• Commission
• Children Education Allowance
• Leave Encashment
• Gratuity
• Daily Allowance
• Dearness Allowance (DA)
• Helper Allowance
• Hostel Expenditure Allowance
• Uniform Allowance
• Books and Periodicals Allowance
• Research Allowance
• Food Coupon
• Custom Allowance
• Project Allowance
• Holiday Allowance
• Food Allowance
• Telephone / Mobile Phone Allowance
• Fixed Medical Allowance

If the default earning configuration doesn’t meet your company policy, you can modify it as per your need with the help of the edit button, or you can create your own.

To Add a new Earning Type

1. Navigate to settings > Payroll settings > CTC Components
2. Click on Earnings
3. Click on ADD NEW
4. Select the earning type from the drop-down list and hit OK; you can view a form to enter the details.
5. Type the unique earning name for the earning type, which you can quickly identify.
6. Type the earning’s “display name” that will appear on payslips
7. Select the pay type
   • Fixed pay – The amount declared as a fixed amount will be paid each month.
   • Variable Pay – Variable Pay will differ every month, you must provide the variable pay amount while processing the payroll.
8. Select the Calculate type
   • Percentage of CTC – Percentage of CTC is applicable only to basic earning type, and the desired percentage can be entered in the provided text box.
     Let us assume the CTC is 5 Lakhs, and when you enter 50% in the percentage of CTC textbox means it will allocate 2.5 Lakhs to the basic earnings.
   • Percentage of Basic – Except basic many earning types are calculated as the percentage of basic and the desired percentage can be entered in the provided textbox.
     For example, if HRA is mentioned as 50% of Basic, while the basic is 2.5 Lakhs. Then 50% of 2.5 Lakhs, which is 1.25 Lakhs will be allocated to HRA.
   • Flat amount – You can enter the fixed amount in the provided textbox.
9. If you enable the “Do you want to include this component in employee CTC?” toggle button, then this component will be shown on the payslip as part of the CTC.
10. Enable the “Do you want to calculate tax for this component?” toggle button to consider this component as a taxable component. i.e., gross taxable income will arrive including this component.
11. If you want to calculate the payment based on how many days they have worked, enable the “Do you want to calculate this component on a pro-rate basis?” toggle button.
12. If you wish to consider this component as an FBP component, enable the “Do you want to include this component as Flexible Benefit Plan? (FBP)” toggle button. By enabling the “Do you want to restrict the employee from overriding the FBP amount?” option, you can prevent your employees from overriding the FBP amount.
    Note: FBP gives your employees the option of customizing their CTC structure by determining how much they wish to receive under each component. It will also help them save money on their taxes.
13. Choose whether “Do you want to include this component for EPF contribution?” or not?
    • “No”– If you do not wish to consider this component in your EPF contribution.
    • “Yes, always” – This option will include the component for PF wage irrespective of any limit.
    • “Yes, when the sum of PF wage is less than Rs 15,000” – This option will exclude the component if the salary is more than 15,000/-.
14. Choose whether “Do you want to include this component for ESI contribution?” or not? If you do not wish to consider this component for ESI contribution, leave it disabled.
15. Enable the “Status” toggle to make this component Active and use this component in salary templates/salary details. If you don’t wish to use this component in salary templates/salary details, then disabling the toggle button make this component Inactive.
16. Finally, tap on the “Save” button to save this earning component.