Salary Allowances Confusion: What Should Be Included Beyond HRA, DA, and TA?

Hi all friends! Our company is revising staff salaries. Could anyone help me out? Which allowances, apart from HRA, DA, and TA, should be included? What should be included in special and superannuation allowances? Please reply soon; it's really urgent. One more thing, some people say HRA and DA are calculated on Basic, and some calculate on CTC. Which of the two is correct?

Regards,
Archana

HRA, DA, and all other allowances are calculated on Basic Salary. Some organizations like Vatika calculate these allowances on Gross indeed.

Thanks & Regards,
Shikha:)

Basic salary is the base for the calculation of any salary structure. Once the basic pay is fixed, allowances such as Dearness Allowance, House Rent Allowance, Special Pay/Allowances, etc., shall be fixed as a percentage of such Basic Pay. Usually, City Compensatory Allowance will be a fixed sum, and the same will be equal for all employees irrespective of grade or pay scale. Other allowances, such as Night Shift Allowances, Heat Allowances, etc., shall be based on the number of days of work.

There are companies offering "CTC" to employees, and employees are trying to find out what their Basic Salaries are. Similarly, fixing the basic salary as a percentage of gross salary. These practices are wrong from the point of view of pay fixation.

Regards, Madhu.T.K

May I know what is heat allowance? Is it related to some of the temperature conditions related to blast furnaces, etc... Any idea about superannuation?

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Hi Archana,

HRA is always calculated on Basic Salary. All the salary components are calculated based on Basic Salary except for ESI. ESI is calculated on Gross Salary only (Employer Contribution: 4.75% & Employee Contribution: 1.75% of Gross Salary). Employees whose Gross Salary is Rs.10,000 or less per month are entitled to have ESI as a part of the salary structure. You can also include the Medical Reimbursement Component in the salary structure, which amounts to Rs. 15,000 annually. Additionally, you can include Fringe Benefit components in the salary structure.

Regards,
Nilima
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Hi,

As CTC is a combination of Fixed + Variable Components, what all comes under the variable components of a salary?

Hello,

For understanding your query, I need to comprehend your salary system. How is it decided? Are you calculating based on the CTC concept or the traditional concept? Is there any settlement in force for this purpose?

All these aspects need to be understood before a proper reply can be given. Please write to me at my email [Login to view] or contact me on mobile at 9227233315.

With regards,
Himanshu :)

Hello Janaki!

As far as my information goes, variable components include performance bonus, TA, and in some cases, CCA as well. I hope this helps you a bit.

Dear Archana,

All are given good examples. Basic itself is saying that it is a basic component to calculate the other allowances. DA (may or may not), HRA (as per the location), CCA (depends on the cost of living of the city), Heat allowance (may not be applicable to all organizations except manufacturing), Special Allowance (depends on taxable income), Mobile allowance (depends on the level of the job), Library allowance, etc.

Basic should be standard and vary based on the levels of employment. We hope that you create a better salary structure/pay scale. All the best!

Goodbye,
Srinivas

Dear Archana,

All are given good examples. Basic itself is saying that it is a basic component to calculate the other allowances. DA (may or may not), HRA (as per the location), CCA (Depends on the cost of living of the city), Heat allowance (may not be applicable to all organizations except manufacturing), Special Allowance (depends on taxable income), Mobile allowance (depends on the level of the job), Library allowance, etc.

Basic should be standard and vary based on the levels of employment. All the best. We hope that you make a better salary structure/pay scale.

Goodbye,
Srinivas