Basis For The Salary Break-ups

Dear Fraternity,
Happy Vinayaka Chathurthi to all.
I would like to get the gyan on salary break-ups. Please bless with the gyan on salary break-ups.
In my current organisation; we give break-ups as follows
Basic: 40% of the CTC
HRA: 50% of the Basic
Conveyance: Rs. 800/month
LTA, Medical: 15000 each/month
I observed, that not all the organisations follow the same pattern. Please let me know what is the basis to the break-up. What break-up is legitimate or legally cumpulsory and what r the best practices adopted over different industries?
Thank you all.

Please share whats practiced in your organisation and whatever knowledge you have over that. Please......

Hi Spear,

There is no standard formula for designing salary break up until your company decide to have approved a compensation policy.

1. Basic Salary- As per salary structure.

Non-Operational or Fixed Allowance
1. Variable Dearness Allwoance depending on cost of living index if there
is an agreement with company on this subject to introduce such
allowance.

2. House Rent Allowance: Applicable as per the city grade classification
as A gade B grade C grade and D grade which is
ranging from 30% to 10% of basic as per central
government classifications.

3. Conveyance allowance/ Petrol allowance/ Transportaion allowance:
Depends upon the hierarchy structure for 1st class or 2 Class Local
pass for commuting from local trains. Reimbursement of petrol for two
wheelers to two wheelers ratres are fixed.

4. Any other Allowance which is adapted by the company as part of salary
structrue will determine the salary break-up is purely discretion of the
managment depends on income tax laws.

Generally items from the Income tax exemption adjusted in salary package to extend the tax benefits under specific allowace mentioned as education allowance, medical allowance, Leave Travel Allowace etc.

Follwoing statutory payment also considered as integral part of salary.
Operational allowance :
1. Shift Allwoance
2. Overtime Allowance
3. Hazardous Allwoance
4. Attendance Bonus
6. Meal Allwoance ( or Subsidise Meal)

Additional Benefits under Labour Laws
Payment of Bonus Act - once a year
Payment under Gratuity Act - after minimum five years service
Earned Leave Encashments under Factories Act.- once a year

Statutory Deductions Act
Provident Fund Act
ESIC Act
Labour Welfare Fund Act
TDS (Income Tax Act)

These are commenly observed as salary components.

Regards

sawant