Reality of IIT Packages | Truth Behind Salary Package of IT Companies

Truth Behind Salary Packages of Software Companies


Nowadays we see some got 1 crore salary package per year some other 50 lacs per year...etc...etc.Many people who don't know much about corporate just start dividing by 12 and think he is earning this much per month !!. For example, if a person has 12 Lacs of salary package per year, many people who don't know about salary deductions just divide it by 12 and think he is earning 1 lac per month great!!. But the actual condition only that employee knows how much he is getting in hand.

There are many types of deductions are there in a software company and combining all these is known as yearly package. If a person has 12 Lacs of package monthly hardly he gets around 80 thousand.

Deductions of salary comprise of :

1) TDS
2) PF
3) Professional Tax
4) Variable pay
5) other deductions like office transportation, medical, etc

These deductions apply in India. Other countries have their own rules and regulations.

TDS: No TDS deducts below 25k per month salary. But if you have a higher package let's say 12-14 Lacs per Annum then the deduction of tax is very heavy more than 10k. So better to do some investments and show them on the 80c column and other investments those you have. This saves some of your tax.

PF: PF deduction is a good saving but ultimately you are getting a lesser intake per month. but yes I recommend PF deduction because both employee and employer contribute 12% each in employee salary.

Professional tax: INR 200 deducts every month for each employee whether he is doing govt. or private job as professional tax.

Variable pay: In the software industry, most of the companies have the concept of variable pay which they used to pay every year or after six months on the basis of performance. suppose a candidate has 12 Lacs package per year then his variable varies from 50k to 1 lac depend upon the company. So after judging your performance company pays variable amount.

Other deductions: Many companies also deduct transportation fees if you use company transport. some companies include medical insurance within the package only.

These are standard deductions....maybe some deducts more or less.

You can imagine now how much a person will get salary per month if he is getting 1 crore package per year. First of all these kinds of higher salary packages are offered in developed countries like the US, UK.so, if a person is in Microsoft and earning INR 1 crore of package in US then his expenditure and taxes and other things, reduces that package not more than INR 20 Lacs of India. Means 1 crore of package in US is equivalent to 20 Lacs package in India.

So just do good work....learn new things...and be happy don't think much about the package.