Understanding Salary Structure in India: How Do You Calculate Taxable Income?

Hi friends!!!

Can anybody shed some light on the salary structure in India and how to compute taxable and non-taxable income?

Regards, Shweta

Hi Sweta,

Typically, there are three components: Fixed salary, Variable salary, and benefits.

Fixed includes Basic, DA, HRA, PF, PT, SA (This includes earnings as well as deductions).

Variable includes Special allowance, Project allowances, Bonus, Performance pay, Incentive, etc.

The benefits part includes car plan, Holiday package, Leased accommodation, Telephone, Medical/Hospitalization schemes, etc.

All these components together form the CTC.

Regarding Taxable and Non-Taxable components, Sodexo and some medical allowances are considered non-taxable. Most other allowances are either covered under the Income Tax Act or the FBT act.

Therefore, it is advisable to check the FBT act before making any alterations to your current salary structure.

Hi Swetha,

We had a lot of discussion on this topic earlier here. Why don't you input the keywords in the quick search and read those posts? I am sure it would help you.

Anyways, here is a link to one of the posts. Hope it would help you out.

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Regards, Soumya Shankar

Hi Sowmya,

Is quarterly basis performance pay paid every 4 months, or is it calculated on a monthly basis?