The Dark Side reality of engineering packages

The Reality of Engineering Packages

In our country, the package of 1st tier colleges are highly overrated because of the 1 crore foreign placement packages and 50 lac domestic placement packages provided there, as the people boast about it daily but in reality, the student who tells everyone that he got a 40 lakh placement package doesn't know that his package is also more or less around 15 to 17 lakhs and we will tell you why?

 First of all, We should know that the IITs are institute students there are also human. So, it all depends upon the students there how they perform to get placed, IITs just help them by bringing companies over their campus (that too majorly for CSE, IT, ECE).

Today we will bust this toxic myth on this type of packages:-

Look at this placements chat which to the highest placement holder.

For example:- If two student from 1st tier IIT institute got their placements, 1st one got a placement of 60 lakhs P.A and the 2nd guy got a 20 lakhs P.A placement. There may be a possibility that the 20 lakh is a better deal let us tell you how. It is because of the rule that the total amount is calculated by adding all the allowances, tax deduction, joining bonus, performance bonus, ESPOs, bonuses, and so on. Read more for a more elaborate explanation.

Taxation on placement salaries:-

Taxable income or gross income or adjusted gross income includes salaries, wages, bonuses, etc. along with unearned income and investment income. It is the amount that will be used to determine your tax liability. Here we are talking about taxation on a person's salary. In simple words, we can say that the greater is the salary greater is the tax deduction.

Allowances:-

Companies and organizations often provide allowances to their employees that are of a specified nature or for a specific cause. The primary and the most important thing to do here is to check the nature of the allowance offered. There are so many types of allowances offered in the name of your salary and it is your choice that you will use it or not.

• HRA(housing allowance)
• MA(medical allowance)
• book allowance
• LTA(leave travel allowance)
• CA(convenience allowance)

Hands-on salary:-

In-hand salary is the amount of money that gets credited to your account at the end of every month or in other words the actual amount which you receive after various deductions from your salary which is way lesser than the actual package amount. Whereas the Gross salary is the total salary which you receive without any deductions.

There can be many scenarios where you are paid lesser than the actual salary you were expecting.

Real-Life Example:- 

Assume that a student got a 22 lakhs placement package in which his in-hand salary is 11.55 lakh per annum with a joining bonus of 2 lacs and a performance bonus of 45000 for the initial year and the other 1 lacs of his placement are in the form of RSUs with some allowances because of which his salary reduces to 13 lacs per annum from the next year with some including increment and there is a second guy package of 16 lacs who gets an in-hand salary of 12 lacs per annum and a joining bonus of 4 lakhs with no ESPOs or RSUs because of which his in-hand salary becomes 14 per annum including the early increments. In both cases, the second guy is getting much better in hand salary with a preferable job description.

What is ESPOs?

- The ESPOS (Employ Stock Option Plans) are given with the offered packages as a lark chunk of it.

- These companies stocks which are given to you after applying some restrictions like you can't sell them whenever you like and they will be provided to you infractions every year.

- They give you an option buying opportunity to purchase them after a fixed time in the future but at a predetermined value.

What is RSUs?

- The RSUs (Restricted Stock Units) are certain stock units that can be cashed out after a fixed time interval.

- They are also given to the employees which are included in the package and their value can the greater than your base salary in a year.

- They are also restricted by some limitations and procedure like a time restriction that they can only be sold by you after some time and they will be provided to the employee infractions as decided by the company which also include taxing on them which is very complex to discuss.

How do the salaries of the employees reduce after 1st year of a job?

- The big packages of 30 to 50 lakhs reduce immensely as the employees will not be provided joining bonus, few allowances, and the RSUs regularly every year. So, after the end of the first year, their salary reduces to a low value.

Conclusion:-

By knowing these facts, We can say that in reality most of the Indian companies give approx 1 salary more or less. And the in hand salaries of the placed students can disappoint them at a later stage. The companies who give a large component of there packages in hand are far better than those who keep their reality behind some shadow.

Tips on choosing what is best for you?

- Everyone needs to do a detailed reality check on the company for which they are trying to get in so badly.

- Consider knowing their work weightage.

- And is the package actually that good as it seems to you in the long term?