The salary components are split for the following reasons:
- Tax benefits
- Ease of administration of C&B.
- Standardization of the components
- Statutory requirements
PF -12 % is levied on the Basic salary which is a statutory requirement and also provides the employee tax benefit understand section 81 D while computing his taxable income.
HRA here again one gets the tax benefit by providing the actual rent receipts as per the IT tax act.
The essence of the salary structure is to provide the balance in tax benefits to employees viz higher take home salary as per the IT Act and also meet the statutory requirements.
Medical allowance 10%
in addition to that we have PF which explained above nicely.if you want to know more about PF and ESI then u can mail me at