Tax-Savvy Salary Breakdown: How Can I Minimize Taxes on My INR 1 Crore CTC in India?

I am a US citizen and may be taking up an assignment in India with a total CTC of INR 1 crore per annum. What is the best breakup to minimize taxes? I will finally be converting to US$ to take the earnings out. Thanks.

Dear HRA - 50% of your basic for metros is exempt from tax.

Go for Car scheme - The EMI payable is exempt from tax, plus 20,000/- p.m. towards fuel & maintenance is exempted from IT.

Food coupons - max 5400 p.m. are exempted from tax.

Medical bills - 1250 p.m. are non-taxable. The premium for mediclaim is also exempted from IT.

100,000/- savings on bonds, ULIP, Insurance, etc., is tax-free.

Anyway, you have to shell out 1/3 of your CTC as IT.

Hi,

You are advised to keep your basic salary as minimal as possible to maximize reimbursements and benefits. The House Rent Allowance (HRA) may amount to 50% of your basic salary.

Your Social Security Number (SSN) contribution may be applicable since the United States does not have an agreement with India. This will result in a deduction of 12% of your basic salary as a contribution to SSN.

Regards

Hi,

Rs. 1 crore is a very high CTC, and there is little scope for saving much income tax on it. Try to get as many actual reimbursements from the employer instead of salary, but keep in mind that not all reimbursements are tax-exempt.

I do not agree with the views that Car EMI is exempt from tax.

My sincere suggestion to you would be to consult a Chartered Accountant specializing in Tax Laws. HR professionals are generally not income tax experts; therefore, the advice you receive through this thread may not be very professional. Rather, it will be in bits and pieces and incomplete.

Thanks & Regards

Thank you, everyone. What is an SSN? If I live in Pune, will 50% of my basic salary be tax-exempt as HRA? Even if I do not use the full HRA for rent, will I still get the exemption?

I will certainly use a tax advisor once I am closer to a deal.

Thanks again.

Pune is in the Metro category. You cannot avail the entire 50% of your basic as HRA to be out of the tax net. The saving is (actual rent paid - 10% of your basic), and you have to prove it with a rental receipt or a lease agreement.

The Company-owned Car scheme - EMI Rs. 2800 + odd per lac will be deductible from your salary, and the same is exempt from tax, but there is a ceiling. Please check with the consultants.

Hey Challenger!

SSN stands for Social Security Number. You will save 12% of your basic salary, and the company will also contribute 12%. This savings cannot be withdrawn and taken back to your country; you must withdraw and spend the money in India.

The exemption on House Rent Allowance (HRA) will be based on the actual rent paid.

Regards.

Hi Everyone,

I am new to this site. I want to restructure the CTC of the employees of my company. Ours is a pharmaceutical KPO, hence I cannot add the dress allowance. Also, ESI/PF is not applicable for our employees since their basic is more than ₹6,500/- per month.

I am not aware of what "Sodexo" is, as mentioned by Veena J and Yajeet the HR. Can someone please help me understand this?

Could you guys please help me with the names of a few more allowances that could be added to minimize the tax implications?

Thanks.

Tax-Exempt Benefits and Allowances

Following benefits/allowances are exempt from Income Tax. Do consider these while restructuring salaries:

- Washing Allowance: Rs. 5000 per annum.
- LTA: Rs. 20000 per annum, twice in a block of 4 years.
- Conveyance Allowance: Rs. 9600 per annum.
- Medical Reimbursement: Rs. 15000 per annum.

Sodexo food coupons can be encashed at hotels and departmental stores for the purchase of food and food items. For more details, please visit in.sodexo.com.

Thanks & Regards

Dear Mr. Vkokamthankar,

Thank you for the information provided. It will definitely help.

If we talk about washing allowance, what exactly can it be considered for? What exactly is a "washing allowance"?

Thanks.

Ms. Jyoti,

Traditionally, it is an allowance paid to employees for washing and maintenance of the uniform provided to them. However, it is not a must that the employer has to provide a uniform to pay a Washing Allowance. Hence, you may pay a Fixed Washing Allowance of up to Rs. 415 per month to employees.

Thanks & Regards