Salary calculations

[anupvijay]

Hello friends,

Just want to double check my points for earnings.
My past 12 months' earnings are divided amongst 2 employers as I
switched jobs.

My Gross salary as per appointment letters from both companies are
well above £5000 mark which gets me the required points in my
income band/country code section.

But now, as per pay slip, in hand amount is well below the £5000 mark.
Also the total income before tax deduction in the payslip might also be
just less than required.

Which is used by HSMP team to calculate points ? The gross as per
appointment letter or the total income before deduction of tax or the
in hand(I think this is not used)

Any info appreciated.
Regards

[zahidhsmp]

They consider the gross salary for calculating the points for salary and the not the net salary after tax.

Zahid

[anupvijay]

Thank you Zahid.

Now there are 2 things about gross salary.
One is the gross pay package and one is the net pay before tax deductions.

Depending on salary break up the net pay before tax deductions
can vary significantly from gross pay package because some
parts of salary are based on performance and coe up in the salary
slip at the end of financial year only.

So

Any one who actually faced such a situation ?

Thanks again
Cheers.

[zahidhsmp]

I think the your overall earning during the last year will count in your earning points calculation. In your case your over all earning including your salary as well as the money that your earn in addition to salary will contribute in your earning points calculation.
However lets see what others say about this situation.

Zahid

[Kayalami]

All employment income received in the relevant 12 month period be it a standard net or the extra bonuses to an increased gross figure will be considered as long as this has been declared for tax purposes.

[zahidhsmp]

Dear Kayalami
I have a confusion in salary amount calculation. In our organization apart from salary some bonuses are also given depending on the performances. The salary is transferred to the bank after deducting income tax but the bonuses are transferred without tax deduction. It means I can only claim the income without bonuses as taxes are not deducted from bonuses?

Regards

Zahid

[Kayalami]

The salary is transferred to the bank after deducting income tax but the bonuses are transferred without tax deduction

Nice place to work - are they accepting applications. Is this policy specific to your company or do others in your country do the same? HSMP Team will not accept income that is not declared for tax purposes. You may wish to submit evidence from your country's tax authorities that they have exempted such payments from tax deduction despite such being declared under a specific statute (law).

[anupvijay]

Hello friends,
When we say "declared" that means we have paid tax on it. Am I correct?

One way of proving it is the income tax returns that are filed for every
financial year.
But in case like in mine, I have not yet filed the return for last financial
year because my company is yet to give me the document which it is
supposed to(Form 16). And I do not expect it before another month or so
because the last date for filing returns is still far away in India.

So all I have as proof of earnings for last year is salary slips, bank statements and appointment letter with salary break up.
Is this sufficient for the HO to be convinced that my income has been
taxed. The payslip does have tax deductions mentioned.

Please confirm.
Cheers.

[Dip]

When we say "declared" that means we have paid tax on it. Am I correct?
Cheers.

Normally tax is deducted at source by your employer and as long as you only receive salary, the employer will deduct appropriate amount at source and ensure all monies payable to the IT authorities by you during the year are recovered. (This does not cover other income, unless you declare that to your employer.)

For want of better words..... what you hide from the IT authorities is undeclared, rest is declared.

Show your payslips and you are fine.

The salary is transferred to the bank after deducting income tax but the bonuses are transferred without tax deduction.

Strange!! Very strange!! unless they gross it up for tax and pay the tax themselves. Regardless, you have to declare it on your IT return and I doubt if HSMP would accept it if it is outside of your salary statement you use for filing returns.

Rgds
Dip

[anupvijay]

I have another question now
They never stop coming ain't it ?

While I switched jobs I got my leave that were piled up [hard working
employees do have ] encashed.

This came as a cheque along with the final settlement and experience
certificate from my ex-employer.
As it is a significant amount I would be preferring to show it as my earnings.

But it is not part of my pay slip and neither is it part of my return till now
as I have not filed the return yet but i do plan to.

Now what ?
Cheers.

[Kayalami]

Employment income including payments in lieu of holiday's and other gratuities, bonuses etc that is not declared for tax purposes is not acceptable. Either wait till you file it and get the relevant return or don't submit it - simple really.

[anupvijay]

Thanks Kayalami,

Let me do my calculations again

[zahidhsmp]

As far the tax on bonuses are concerned I contacted the Finance Manager of my organization and he told me that the bonuses are transferred without tax deduction but there taxes are settled from my pay till the end of the financial year. Means that the bonuses will also be included in my overall earning as the taxes are also deducted from them.

Thanx for response

Zahid