What is flexi pay in CTC?

flexi pay
Reading Time: 2 minutes

‘HR’, a small word with big meaning! We all feel super rich on our salary day, right? Employees, from office boys to CEOs, MDs, are on cloud nine when they receive a message ‘salary has been credited to your account.’ But, all this happiness turns into confusion, when they check their payslip. It is filled with so many terms, which a fresher doesn’t understand and they believe it’s time to leave this planet. Agree, little exaggeration here!

This piece of writing tries to cover ‘what is flexi pay in CTC’ so that you can get maximum benefit from it. Many terms are mentioned in our payslips, which are new to you, so let’s first start with ‘flexi pay in a salary breakup’.

Going by its definition, ‘flexi pay’ is that part of the salary, which an employee can receive against particular expenses, mainly to avail tax exemptions. Under this benefit, employees get an opportunity to plan their flexi pay amount, depending on anticipated costs.

As flexible benefit plan is designed with the objective of saving tax and hence, it includes:

  • House rent allowance (HRA),
  • Leave travel allowance (LTA),
  • Telephone bills / fuel bills
  • Medical expenses
  • Food coupons
  • Conveyance

In simple words, it reduces your taxable salary by submitting proof of expenses for the mentioned flexi pay amount. However, if you fail to submit receipts of expenses, the taxable amount will be deducted from your salary.

Some employers pay the benefit amount upfront and ask for receipts of the same at the financial year end. Income tax is deducted if employee fails to submit the same. On the other hand, some organizations can deduct the Flexible Benefit Plan amount from your salary on a monthly basis and when you submit the proof at financial year end, the deducted amount is reimbursed.

A flexi pay package is a USP for many companies and hence, they include flexible allowances in employees compensation packages. Organizations that opt for HR payroll software get to automate this process thus, saving the time and efforts for its HR department. Eureka! Accurate flexi pay calculations.

Pocket HRMS, a cloud based HRMS software is aimed to help companies in all HR and payroll related functions. Its payroll module makes payroll processing easy and, quick and error-free.

Now is the time to switch to spreadsheet-free payroll processing with Pocket HRMS, since it simplifies complex payroll & HR functions. Write to us at sales@pockethrms.com.!

Also, keep checking this space as some more insights coming soon on salary structure in India.


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