From the Executive Editor

     Print Edition: February 2013

Were you livid when your pay packet showed a lower take-home salary without any change in your employment contract, forcing you to seek clarification from the accounts department? Were you left guessing when your provident fund statement showed that the employer's 'matching contribution' was not the same as your own contribution towards the Employees' Provident Fund?

The fact is that your salary includes several moving parts, the details of which many of us do not know. Changing laws and regulations have their impact on them.

For example, one element that was about to witness a major change recently was the way the provident fund deductions are calculated when the Employees' Provident Fund Organisation issued a circular on the last day of November 2012 saying that "all allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as part of the basic wages".

In other words, companies would have had to include conveyance, transport and special allowances in the basic salary for calculating provident fund contributions. As the move triggered a debate on its impact on EPFO subscribers' take-home pay, the circular was hurriedly withdrawn.

Money Today January 2013 issue
Other than provident fund, there are many more components in a salary package, such as house rent allowance, leave travel allowance, bonus and their tax implications, that are perhaps more complicated.

In our cover package, we try to help you understand all of these components. We tell you in details about your provident fund and gratuity entitlements, how to view employee stock options (ESOPs) in case they figure in your overall compensation package and the differences between being a permanent employee, one on fixed-term contract or someone enjoying the status of a consultant.

As the financial year is coming to a close, you must be considering investing in tax-saving instruments. This time round, we have an additional option of saving tax through the Rajiv Gandhi Equity Savings Scheme that aims to promote retail participation in the equity market.

Also, to make tax returns less complicated, savings account interest income up to Rs 10,000 has been made exempt from tax. Additionally, individuals who have attained 60 will be considered as 'senior citizens' for all tax provisions. Earlier, some tax benefits were available to those above 65 only.

Investing in infrastructure bonds will no longer get you tax benefits. We bring you the entire spectrum of tax-saving instruments and how you can benefit from them. Make the most of it.

Executive Editor

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