Friday, March 2, 2007

Pay checks in Indian IT, Finance and Manufacturing

Via Gautam Ghosh's blog
You can check the salaries in India at this site - PayCheck India

Some indicative figures:
Vice-President: Rs. 5,355,105.58
Project Manager: Rs. 1,710,159.99
Senior Engineer: Rs. 994,350.35
Fresh Grad: Rs. 300,000 - 400,000

I have checked with a few friends in India, and the weighted salaries on the site are very representative for IT. For Finance, it doesn't quote iBanking salaries, only insurance salaries. I have no friends who are insurance salesmen...

Some things to note
-- Most of the companies tend to quote Cost-To-Company (CTC) as the package. While in Singapore and US, the quoted package is usually your basic salary.
CTC includes [Basic + Allowances + Loan opportunity costs + Retirement benefits + Variable pay (!!!)]

-- Having said that, the allowances are a core part of the salary which will ALWAYS be given. They are just a structured way to give the employee more money outside the basic salary.
So if there is a taxi allowance of Rs. 50k as part of the package, the employee will always get 50k. Plus extra taxi reimbursement every time a taxi is taken after 9 PM. This is different to Singapore where the taxi claim is an actual reimbursement.
Rationale: Basic salary is kept low by shifting more salary to allowances. So retirement benefits paid are low, as they are a % of the basic.

-- Tax rate in India is 33% at the high end. But the tax code was formulated long long long before the IT boom, when a Rs. 300,000 package was considered for CEO's. Anything over Rs. 250,000 is taxed at 30%.
(Source: finance@Indiamart)
110,000 = NIL
100,001 - 1,50,000 = 10%
150,001 - 2,50,000 = 20%
250,001 upwards = 30%
1,000,000 upwards = 33%

Compare this to Singapore:


Chargeable Income ($)

Rate (%)

Gross Tax Payable ($)

On the first
On the next

20 000
10 000

0
3.50

0.00
350.00

On the first
On the next

30 000

10 000


5.50

350.00
550.00

On the first
On the next

40 000

40 000


8.50

900.00
3 400.00

On the first

On the next

80 000

80 000


14

4 300.00
11 200.00

On the first
On the next

160 000

160 000


17

15 500.00
27 200.00

On the first
Above

320 000

320 000


20

42 700.00


So, if you have a package of S$ 100,000 = Rs. 28 lakh
Income tax in Singapore = S$7100 = Rs. 1,98,800
Income tax in India would have been Rs. 8,66,500 for same salary


How to Compare
-- Trying to understand the Indian CTC structure on the above website is a total waste of your time. You will get it wrong.
-- So better to modify your overseas package to suit the CTC structure without the loan component. There is a [Total Remuneration - Loans] CTC figure on the PayCheck site.
The corresponding overseas package is your [Basic + Always-paid allowances + Average bonus + Retirement benefits - Income tax]. Do not count medical benefits etc as the overseas and Indian benefits cannot be easily compared. Also, these are a very very small part of the Indian CTC package.
-- After this you might want to compare the retirement benefits alone. This will give an understanding of the take-home pay


Special Cases
MSFT starting salary:: ~ Rs. 1,000,000
Google India starting salary:: ~ Rs. 1,300,000


Reading is fundamental
Salary "survey" at In Hyderebad blog
Salary figures at R2I blog

9 comments:

Anonymous said...

How much does Microsoft and Google actually pay (not CTC) but cash in hand - for a fresh grad?

Arun said...

It is difficult to figure that out unless the breakdown of the CTC figures is known.

Better to go to payscale.com India site, and configure a similar profile to see if they have some data

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