Understanding HRA, Conveyance, and Special Allowance in Salary: What Are the Legal Percentages?

Dear Seniors/Juniors,

Please help me understand the concept of HRA and conveyance in the salary structure. What is the legal percentage for both?

Additionally, what is the legal definition of Special Allowance? Is it considered part of wages if the ESIC Act is applicable?

With Warm Regards,

Vikas Kumar
09968008206

Dear Vikas,

There is no law that dictates how much HRA or conveyance percentage should be included in the salary structure. We are structuring the salary considering the income tax perspective, whereby HRA should be 40% of the basic salary in other cities and 50% of the basic salary in metro cities to qualify for income tax exemption. Conveyance allowance should not exceed 800 per month as the exemption is applicable only up to 800, although this is not a legal requirement.

The term "special allowance" is not clearly defined and should be included in the definition of wages for ESIC.

Thank you.

J S Malik