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Is Rs. 24 Lakhs A Good Salary In India?  
User currently offline22right From United States of America, joined Apr 2004, 420 posts, RR: 1
Posted (9 years 5 months 3 weeks 1 day 2 hours ago) and read 31608 times:

This is for A.netters currently living in India (or familiar with Indian conditions).

My Brother In Law has recently received an offer of around Rs. 24 Lakhs Per Annum (Total Cost to Company - CTC) to work for a multinational firm setting up operations in Pune. Neither he nor I have really worked in India and we have been away from India (barring periodic visits) for over 10 years now. We both are here in the US. So we are somewhat unfamiliar with current situation in India.

Here are some of his questions: Is this a "good" offer? What kind of a lifestyle can he afford to have on this kind of income? Also, What are some typical breakdowns of CTC in terms of basic salary, perks, provident fund, etc etc.

How much does typical house/3 or 4 BR flat cost in Pune (in a decent locality) - both rent or to buy? and How much do decent cars cost? (I am talking more like the Hyndai Accents/Sonatas/ etc rather than the Mercedes?).

How much does typical monthly expenses come to for a family of 4? (Assuming living in a good locality, car & driver, etc etc)

Any pointers or candid comments will be much appreciated.


"I never apologize! I am sorry, but that's the way it is!" - Homer Simpson
13 replies: All unread, jump to last
 
User currently offlineBarfBag From India, joined Mar 2001, 2223 posts, RR: 6
Reply 1, posted (9 years 5 months 3 weeks 1 day 1 hour ago) and read 31594 times:

You're talking about ~US $55000 . Hell yeah, that's a good pay, especially in India! There's a range of midsize cars in the Rs. 4.5-10 lakh mark - Hyundai, Honda, Ford, Chevrolet, GM/Opel, Suzuki... There's no need to buy outright when he can finance it too - EMIs are all the rage. He can live a nice comfortable lifestyle in Pune, take weekend trips to Lonavla or Khandala, or drive up to Mumbai on the expressway. I'm not sure what real estate is like in Pune, but it should be well within his salary, and if he lives in one of the new residential sections that have come up to serve professionals in the burgeoning IT industry there, he'll live comfortably.


India, cricket junior and senior world champions
User currently offlineB747-437B From , joined Dec 1969, posts, RR:
Reply 2, posted (9 years 5 months 3 weeks 1 day ago) and read 31584 times:

Quoting 22right (Thread starter):
What kind of a lifestyle can he afford to have on this kind of income?

A significantly comfortable one.  Smile


User currently offlineNimish From India, joined Feb 2005, 3230 posts, RR: 9
Reply 3, posted (9 years 5 months 3 weeks 23 hours ago) and read 31556 times:

This would be a good salary - but not at a CxO level of a company. Is your BIL going to be a CEO sort, or more of a "senior manager" type of person? If he's a manager, then the salary is excellent.

Watch out for the CTC bit, that can get into a lot of interpretation. You should ask for the split up of the 24L and see that on paper. Until you have that breakup, you won't know what they're actually offering. Often it'll turn out that 24L breaks down to 18L salary component and 6L is variable/incentive/bonus payable after a year. That really sours the deal in my opinion.

Be prepared to pay up to 9L/year at taxes, since there are hardly any tax breaks at that salary level, and the tax would be around 35-40%.

Quoting 22right (Thread starter):
How much does typical house/3 or 4 BR flat cost in Pune (in a decent locality)

I'm not familar with Pune - but I'd still hazard a decent 3BR flat should rent at about 15-25K/month.

Quoting 22right (Thread starter):
How much does typical monthly expenses come to for a family of 4? (Assuming living in a good locality, car & driver, etc etc)

This is tricky - but at least 20K/month (excluding rent/driver) and upto 30-40K/month to "live life kingsized".

Disclaimer: These numbers are not indicative of an average Indian family's spending, but reflect a comfortable life for someone rather well-off.



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User currently offline22right From United States of America, joined Apr 2004, 420 posts, RR: 1
Reply 4, posted (9 years 5 months 3 weeks 23 hours ago) and read 31549 times:

Quoting Nimish (Reply 3):
This would be a good salary - but not at a CxO level of a company. Is your BIL going to be a CEO sort, or more of a "senior manager" type of person? If he's a manager, then the salary is excellent.

Nimish,

It's more of a "Senior Manager" type role..... def not C-level right now, but the idea is to groom him to assume that level in 2-3 yrs

Quoting Nimish (Reply 3):
Watch out for the CTC bit, that can get into a lot of interpretation. You should ask for the split up of the 24L and see that on paper. Until you have that breakup, you won't know what they're actually offering. Often it'll turn out that 24L breaks down to 18L salary component and 6L is variable/incentive/bonus payable after a year. That really sours the deal in my opinion.

Well, turns out I misspoke.. the actual offer is Rs. 22 L (CTC) plus 10 to 15% bonus... so he rounded that to approx. 24 Lakhs (+/- 1 Lakhs give or take)

Now, can you take all of CTC as salary or,by law, are you only allowed to take some x% of that as salary and remainder in perks/allowances?

Quoting Nimish (Reply 3):
and the tax would be around 35-40%.

Wow! That much? He had heard taxes are around 33%.

Quoting Nimish (Reply 3):
This is tricky - but at least 20K/month (excluding rent/driver) and upto 30-40K/month to "live life kingsized".

Rs. 30 to 40 K sounds about right assuming at least 15 to 25 K on rent/mortgage payments as you suggested.

Thanks for the inputs, all.



"I never apologize! I am sorry, but that's the way it is!" - Homer Simpson
User currently offlineNimish From India, joined Feb 2005, 3230 posts, RR: 9
Reply 5, posted (9 years 5 months 3 weeks 22 hours ago) and read 31540 times:

Quoting 22right (Reply 4):
Now, can you take all of CTC as salary or,by law, are you only allowed to take some x% of that as salary and remainder in perks/allowances?

You can take all as salary, there's no compulsion to take perks/allowances. However, most organizations have slabs matching the govt. structure - (Basic + DA + HRA + Gratuity + PF) is the minimum set off the top of my head. On top are allowances (can be called anything - they're all taxable anyway).

Quoting 22right (Reply 4):
Wow! That much? He had heard taxes are around 33%.

I think the official tax rate still works out to about that much (I think it's near 36% now), but I generally use a thumb rule of about 40% since that takes care of other benefits that you're not going to see coming to you as cash (like PF, Gratuity, company insurance etc.).

Quoting 22right (Reply 4):
Rs. 30 to 40 K sounds about right assuming at least 15 to 25 K on rent/mortgage payments as you suggested.

I actually meant 30->40K + rent for a "king sized life". Normal (if there's any such thing!) comfortable life would be about 20K + rent. I'm guessing kid's school expenses would be over and above these numbers.



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User currently offline22right From United States of America, joined Apr 2004, 420 posts, RR: 1
Reply 6, posted (9 years 5 months 3 weeks 3 hours ago) and read 31507 times:

Quoting Nimish (Reply 3):
This would be a good salary - but not at a CxO level of a company. Is your BIL going to be a CEO sort, or more of a "senior manager" type of person? If he's a manager, then the salary is excellent.

What are typical compensation ranges at C-level in India? For small to mid-sized operations of multinational firms doing offshore knowledge-based work (such as R&D, software development, project delivery, etc). By small to mid-sized I am talking 50~150 employees.



"I never apologize! I am sorry, but that's the way it is!" - Homer Simpson
User currently offline22right From United States of America, joined Apr 2004, 420 posts, RR: 1
Reply 7, posted (9 years 5 months 3 weeks 3 hours ago) and read 31504 times:

Quoting Nimish (Reply 5):
You can take all as salary, there's no compulsion to take perks/allowances. However, most organizations have slabs matching the govt. structure - (Basic + DA + HRA + Gratuity + PF) is the minimum set off the top of my head.

Sorry, this may sound like a dumb question, but what is DA, HRA, Gratuity??

Thanks!!



"I never apologize! I am sorry, but that's the way it is!" - Homer Simpson
User currently offlineNimish From India, joined Feb 2005, 3230 posts, RR: 9
Reply 8, posted (9 years 5 months 3 weeks 3 hours ago) and read 31502 times:

Quoting 22right (Reply 6):
What are typical compensation ranges at C-level in India? For small to mid-sized operations of multinational firms doing offshore knowledge-based work

My estimate is that should be in the 25-50L/pa range including a hefty bonus based on the performance of the offshore center.

Quoting 22right (Reply 7):
but what is DA, HRA, Gratuity

DA - dearness allowance (something that's supposed to cover inflation?)
HRA - House Rent allowance - part of the salary disbursed to cover house rents, and can reduce the tax burden
Gratuity - something like a pension fund, unfortunately the govt takes over the money if you quit the job in less than 5 years. If you quit after 5 years, you get the money back or it can be transferred to your next job.



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User currently offline22right From United States of America, joined Apr 2004, 420 posts, RR: 1
Reply 9, posted (9 years 5 months 3 weeks 2 hours ago) and read 31498 times:

Thanks so much, Nimish! You have been very helpful. FWIW, welcome to my Respected Users list....  bigthumbsup 


"I never apologize! I am sorry, but that's the way it is!" - Homer Simpson
User currently offlineJasepl From India, joined Jul 2004, 3582 posts, RR: 39
Reply 10, posted (9 years 5 months 2 weeks 6 days 15 hours ago) and read 31470 times:

Quoting Nimish (Reply 8):
Gratuity - something like a pension fund, unfortunately the govt takes over the money if you quit the job in less than 5 years. If you quit after 5 years, you get the money back or it can be transferred to your next job.

Not quite. You partially described the Provident Fund, where the employer deducts a certain amount (12% of your basic salary) from your pay, matches that amount with its own contribution and deposits it in a government account that has been established in your name. When you change jobs, you get your PF account transferred to the new employer.

You can withdraw the money accumulated in your PF account, but if you do so before retirement, it is taxed. For withdrawals after retirement, no tax is levied.

A Gratuity is part of your salary but is "held back" by the employer every pay period. There is no matching contribution from the employer. Should you stay in the same job for at least 5 years, the entire amount is yours when you quit. If you quit in less than 5 years, you lose it all. The employer gets to keep it (and eat it!).


User currently offlineNimish From India, joined Feb 2005, 3230 posts, RR: 9
Reply 11, posted (9 years 5 months 2 weeks 6 days 13 hours ago) and read 31467 times:

Thanks for the clarification Jasepl

Quoting Jasepl (Reply 10):
Should you stay in the same job for at least 5 years, the entire amount is yours when you quit. If you quit in less than 5 years, you lose it all. The employer gets to keep it (and eat it!).

This is the part that has hit me on changing jobs in the past!



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User currently offlineHAWK21M From India, joined Jan 2001, 31684 posts, RR: 56
Reply 12, posted (9 years 5 months 2 weeks 6 days 12 hours ago) and read 31457 times:

Quoting Nimish (Reply 11):
This is the part that has hit me on changing jobs in the past!

I moved out after 4yrs 8 months in my First Airline Job.Think about it at times  Smile
Finished 9 out here though.
regds
MEL



Think of the brighter side!
User currently offlineBarfBag From India, joined Mar 2001, 2223 posts, RR: 6
Reply 13, posted (9 years 5 months 2 weeks 6 days 1 hour ago) and read 31433 times:

About cars in India, here's a very good site with detailed information on various models, including prices ex-showroom in major cities:
http://www.overdrive.co.in/price_cars.asp

There are plenty of offerings in the 5-10 lakh mark range.



India, cricket junior and senior world champions
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