How basic and HRA has to be structured for the employee's tax benefits? - CiteHR
Raj Padshah
Trainee - Hr
+1 Other

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Hi, I kindly request you to reply to my below query.
We are shop establishment company (Private Limited Company ) , I want to know the salary break up with percentage , we have the following as part of salary Basic , DA, HRA, CA,MA ,EA,Adhoc Allowances and I want to know the percentage break up for these categories.
Is there any relation between the basic and HRA? How it has to be structured for the employee’s tax benefits?
What is EA and is it tax free? Till what limit?
How much MA is tax free?
How much CA is tax free?
What are the slabs for PT?
Final in-hand salary will also depend upon the TDS
Anne Priya.A

Dear Annepriya,

As per TNSE Act we can follow the structure mentioning below

Basic : 60 - 70%(From CTC)

HRA : 30-40%(Depends on PLace like Rural, Urban, metro) from Basic

MA: Fixed and Max 1000Rs

you can fix other allowances but if its exceeding 1000 then it will be taxable income for the people who exceeding the tax sealing limit.

1. Basic Salary is the core part of salary, and many other components may be calculated based on this amount. It usually depends on one’s grade within the company’s salary structure. It is a fixed part of one’s compensation structure

2. HRA is House rent allowance and it is calculated from the basic salary and It is differ based on the locality of the company. 30 - 40% is considerable.

3. HRA is not consider under Taxable income and if the employee staying in rental home they should submit the PAN card of house owner and receipt for get exception for the tax.

4. Professional Tax is mandatory and it differs by state wise. you can pay the tax on 6month or 3month or everymonth.

5. MA is fixed component and Max 1000rs applicable. It can be taxable if more then 1000rs and it depends.

6. CA is also fixed component and similar like MA.

All those components are Taxable depends on Company.

If required you can add other things too as Allowence

Thank you Sir for this valuable information .
Sir, as per the new PF guidelines(Karnataka , Mysore ) The existing salary limit of Rs 6,500 has been increased to Rs 15,000, thereby expanding both membership base and the quantum of contributions.
since PF calculation will depend upon Basic + DA , what should be percentage of Basic and DA under shop establishment act, since in your previous reply you had mentioned it as 60 % of CTC and if we have to include DA what will be the calculation. Please let me know.
Anne Priya.A

Anne priya,
Basic is mandatory at any cost and DA is Present Market status. DA is calculated from the Basic only and It depends on Market value and inflation rate every year. you can consider DA as 50 - 60% Max.
As you said Basic+DA is PF and Its not required to adding the component DA. So don't get confuse.

Dear all,
How to format our salary structure so that we have to pay the least amount of tax.
which salary components should be varied to higher extent and which on the lower extent ?
Raj Padshah
mob. no.: +91 7508 541 369

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