Understanding Salary Breakup Components and Tax Implications

Hi,

Can someone please help me understand how the salary structure below has been devised and what percentage breakup has been used?

SALARY

--------MONTHLY ----ANNUAL

PARTICULARS ------Rs. ---------Rs.
Basic Salary ------6,000 ---------72,000

HRA ------------------3,000 --------36,000

Special Allowance -----6,280 -------75,364

Conveyance Allowance 800 ----------9,600

Education Allowance ---200 -----------2,400

Subtotal 1 ------------16,280 -------195,364

ADD: OTHER BENEFITS
PF ---------------------720 -----------8,640
LTA -----------------------------------6,000
Medical -------------------------------6,000

Subtotal 2 ----------------20,640

TOTAL COST TO COMPANY ------------216,004

I have corrected the spelling, grammar, and formatting of your text for better clarity and readability. If you need further assistance or clarification, feel free to ask.

Hi Munira,

Your monthly CTC is taken as 18,000 pm. The breakdown is as follows:

- Basic: 6,000 (Fixed)
- HRA: 3,000 (50% of basic)
- Conv. Allowance: 800 (Fixed)
- Edu. Allowance: 200 (Fixed)
- Special Allowance: 6,280 (Balancing Amount to make it 18,000 pm)
- LTA-Monthly share paid annually: 500 (1 Basic annually)
- Medical- Monthly share paid annually: 500 (1 basic annually)
- PF (12% of basic): 720 (Employer's share)

Total Monthly CTC: 18,000 (Sum of all components)

For any further clarifications, please email me at [Login to view].

Bye,
Naga Praveen
Manager-HR
GMS, Hyderabad

Hi,

In an ideal salary breakup, the Basic should be 40% of the total CTC. HRA should be 40% of Basic. Conveyance should be Rs. 800/-. Canteen Allowance should be 10% of Basic. Medical Allowance should be Rs. 1250/-. LTA up to Rs. 3000/-. Other adjustments will be made. PF should be 12% of Basic. Bonus should be 8.33% of Basic. Gratuity and other benefits like superannuation, etc., should not be incorporated into CTC. If you have any other confusion, please contact me.

Regards,
Mrugesh
09898593960 😎

Thanks to both of you. It's just that there are so many ways of calculating a salary breakup. Different companies use different percentages of Basic, HRA, DA, etc. Hence, it can get a bit confusing. Is there an industry standard or a guideline as to what all components in what percentages are to be considered?

I think it's really cool and informative... Good going... just copied it, sorry :-D I hope you don't mind...

Hey, can you guys tell me whether we should try to keep the basic salary and HRA as high as possible or not in salary breakup? I have 22K as special allowances, and the basic is only 30% of the total package, which includes VA/performance part. I am asking from a tax perspective. Thanks.