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Dear All,

Greetings for the day. Also accept my heartiest Diwali greetings in advance.

Please be informed that our company is a construction company, having several projects running at various places all over India. In our company the Gross Salary structure consists of components like Basic, HRA, Transport Allowances etc. One such component is 'Other Allowance' which is basically to compensate all and any kind of allowances which is required to be paid at different regions/localities of the various project sites. E.g, somewhere 'shoe allowance' is to be paid and at some other project 'night allowance' is required to be paid and so on. To compensate all these varieties of allowance at different locations, our management is paying 'Other Allowance' as a component of the gross salary in addition to the other common allowances like HRA, Trans. Allowance etc.

Recently, I came to understand from a reliable source that the nomenclature 'Other Allowance' should not be used as a component of the gross salary and that we have to have a specific allowance instead.

Kindly enlighten me on whether it is really improper to use 'Other Allowance' as a salary component, specifically for statutory reasons? Can there be a suitable alternative nomenclature for the same to resolve our purpose?

Looking forward for inputs from all my seniors, experts and colleagues.............and thanking you in advance for anticipated responses.


Soma Das

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Hi Soma,

Greetings of the Day.I have come across CTC structures of few companies in which 'Other Allowance' has been included as a part of Gross Salary.

Though as suggested by the person known to you it would be right on the part of your company to define the specific salary component for the purpose it is paid rather than mentioning it mere as a Other Allowance,it is bound to create an Compensation Greivance issue.

Normally allowances like Shoe Allowance,Washing Allowance,Night Allowance are paid to employees at junior and middle level employees who are very conscious of the package they are paid as compared to their colleagues and this is vulnerable to discussions between employees as to why his colleague is paid one particular allowance and why he is not.

This might give rise to unrest within the organisation among such employees who have tendency to compare salaries and voice for any difference found.

To avoid you can have a common component naming it either as Additional Allowance or Special Allowance.

Please give a thought to the above and discuss with your management.


Dear Mr. Sumeet,
Thank you so much for your kind response.
I will definitely discuss with the management about the alternative nomenclatures as suggested by you. But before that I just wanted to know whether any of these nomenclatures have any implications regarding the statutory compliance because it was the PF Enforcement Officer only who had raised the question about this 'Other Allowance' as salary component.
Hi Soma,
PF is calculated on Basic Salary.Other Allowances are not considered for calculation for PF.However for calculating ESI you have to taken into consideration Gross Salary in which this component will be calculated as a part of salary.
Other allowance has not statutory implication because it is just a part of Gross Salary and CTC in wider picture.
Please let me know what were the comments /views of PF Officer.
Dear Mr. Sumeet,
Greetings............Happy Diwali !!!
In our company, the gross salary components consists of Basic+HRA+Trans.All.+Child Education All.+Soft furnishing All. (for certain grades only)+Other All.
The PF enforcement officer pointed out that "Other All." should be a specific all. and the nomenclature should not be like this. But for us, specifying it would be difficult because we are covering any and all kind of allowances applicable for various projects running at different parts of India.
That's why I raised the query of implication of continuing the nomenclature "Other Allowance" and/or a suitable alternate nomenclature which would resolve our purpose.
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