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Company offer different salary structure to one candidate

02 June 2018

Suppose a corporate company makes a employment offer to a candidate where the company pays a high lump sum in the salary to that employee to whom the employment offer is being made at the end of each year whereas for all the other employees the company do not offer such a lump sum at the end of the year. Will it create a problem to the company during Audit or income tax? Will it be illegal in any way?

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4 Replies

CS M Pota (Company Secreatary) (3184 Points)
Replied 02 June 2018

Yes, this can happen .This is purely a mangement prospective .The question of leagality or illegality does not create at all.

But such type of practice definitely creat anger and dissatisfaction among the other employees.The Mangement should be capable to explain properly and to the satisfaction of the other employees.the resons for the such type of Offer.

Sky Above (7 Points)
Replied 03 June 2018

Let it be illustrated in the following way with hypothetcal structure and hypothetical values:

The company has a salary structure like Basic+HRA+Travel Allowance+Medical Allowance.

The company has a band structure like Band I salaray range is 20-40 lakhs per annum for Band I employees, Band II salaray range is 41-65 lakhs for Band II employees, band III salary range is 66 lakhs-80 lakhs for Band III employees, band IV salaray range 81 lakhs - 100 lakhs for Band IV employees like this...........

Now for one employee who will be in Band II, the company offers a salary structure like Basic+HRA+Travel Allowance+Medical Allowance+ Year end allowance. So for this employee there is an component which is year end allowance which is paid at the end of an year.

Will it be illegal for the employer to do this? Will it create a problem to the company during Audit or income tax?

CS M Pota (Company Secreatary) (3184 Points)
Replied 04 June 2018

No there should not be any question.

d suresh (24 Points)
Replied 04 June 2018

It's the discretion of the management to fix salary. If it was a government company then it is not possible. There is no issue as far as other companies are concerned