What is DA?
DA-Dearness allowances
The dearness allowance is a part of the total compensation a person receives for having performed his or her job. For example, workers in India might have a base salary or pension, along with an allowance for housing and the dearness allowance. D.A. is a percentage of the original salary. The percentage is reviewed and may be changed on a six-month cycle.
One explanation for D.A., according to work guidelines, is that the Dearness Allowance is provided to help against rise in prices for those on pension. This allowance may also be provided to family members receiving benefits from a worker’s pension. For example, a central government order might change the Dearness Allowance by 6 percent for employees of the main branch of government, due to new information about living expenses and price increases. The amount might be paid in a lump sum at some point to bring the overall pension and allowances up to what they should be.
There are also times when a new level of Dearness Allowance might be established along with housing and transportation allowances. This generally occurs when the overall pay schedule is revised. Base salary levels are reported separate from the various allowances. In India the D.A. has a history dating back to World War II. At that time, many of the lower-paid employees received D.A. based on their wages or salaries. Many changes to Dearness Allowance and its computations have occurred over the last 60 years, according to both private and government studies.
One guideline suggests that the D.A. is paid twice each year (January and July) based on a percentage of pay in two specific months. Numbers used to calculate the D.A. include 12-month average of pay and a set index level to get the percentage increase in prices/cost of living. Dearness Allowance is paid on a range of base-pay levels.
According to the systems developers at tech company Taranaga, the combination of a Dearness Allowance with base pay was approved by the Indian government in New Delhi in 2007. What happened was that the D.A. (that protects pensioners in case of a cost-of-living increase) was combined at a 50 percent level with base pay. One of the details included in the decision also set a “ceiling” for certain benefits. The decision means that those benefits will be calculated on base pay plus daily allowance, rather than just on base pay.
There are similar cost-of-living adjustments and indexes in the United States and other countries. Some of these operate in the same way as the Dearness Allowance in India, giving percentage increases to make up for rising costs. Others are allowances for workers who must live and work in areas where the general cost of housing and meals is higher than a certain base amount. For example, some federal government employees are paid an “overseas” allowance that makes their total pay a bit higher than what they might receive in the U.S. These allowances vary with the country and the location an employee is assigned to.
What is the formula for Gratuity Calculation?
Gratuity is a part of salary that is received by an employee from his/her employer in gratitude for the services offered by the employee in the company. Gratuity is a defined benefit plan and is one of the many retirement benefits offered by the employer to the employee upon leaving his job. An employee may leave his job for various reasons, such as - retirement/superannuation, for a better job elsewhere, on being retrenched or by way of voluntary retirement.
Last drawn salary x no. of year's of service x 15(in case of permanentindustry) & 7 (in case of seasonal industry) / 26
What is the ceiling for PF & ESI?
In PF a small portion of the employees salary is deducted and deposited with the government PF office and at the time of retirement it is paid as a lump sum to help the employee lead his life peacefully in spite of retirement and loss of monthly income.
Employees’ State Insurance Scheme of India, is a multidimensional social security system tailored to provide socio-economic protection to worker population and their dependants covered under the scheme. Besides full medical care for self and dependants, that is admissible from day one of insurable employment, the insured persons are also entitled to a variety of cash benefits in times of physical distress due to sickness, temporary or permanent disablement etc. resulting in loss of earning capacity, the confinement in respect of insured women, dependants of insured persons who die in industrial accidents or because of employment injury or occupational hazard are entitled to a monthly pension called the dependants benefit.
PF - 6500/- ESI - 10500/-
How PF iscalculated?
12 % of basic salary from employeeas employee's contribution and the same percentage from employer (from this 12% of employer's share, it divides in two parts i.e. 3.67 % for Employee pensionscheme while rest of 8.33 % for PF account)
What is the calculation for Bonus?
For computation of bonus salary for a month is actual or max. of 3500/-. No. of actual working days or max. of 12 months Min. 8.33 % to Max. 20 % (As per allocable surplus)
It is from 3500x12x8.33%=3498.60 to 3500x12x20%=8400.00 (As per working days,the computation will be different)
Is Bonus compulsory? Tell the Act.
Yes, as per recent amendment the employees who get salary upto 10000/- permonth are eligible for bonus.
Which act helps in non applicability of ESI?
There is no such Act, but with the best of my knowledge where W.C. Act appliedESI Act doesn't apply.
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Regards,
Er Neha Godbole
HR Executive
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