Understanding HRA and Allowances: Are They Based on Basic or Gross Salary?

Dear friends,

Would like to know whether HRA, Conveyance, Medical, Education Allowance is calculated on basic or gross?

Why do some companies fix conveyance at 800/- per month? Is there any reason for this?

Regards,
Tittli

Dear Tittli,

Many companies have different ways of calculating; however, while calculating, we need to keep in mind that the basic and gross pay is fixed at par with the minimum wages of that state.

Regards,
Jatin
9762382477

Yes, allowances are calculated based on the basic salary, and conveyance is fixed at 800 because the maximum rebate on conveyance in income tax is 9600 per year.

Ajaay Raaghav

Hi Tittli,

1. No, allowances are not calculated on basic or gross salary, except for HRA, which is 50% of the basic.
2. Other allowances are decided according to exemptions in the IT Act.
3. Conveyance allowance is fixed at Rs. 800 by most companies because as per the IT Act, only Rs. 800 exemption is allowed.

Regards,

Hi, this is Harish Gaur. I want to know how salary is divided into different heads like basic, HRA, Conveyance, CCA, special allowances, education allowance, and medical allowance. Please explain by taking 10000 as the gross salary.