Salary Split for New HYD Company: Are These Options Fair and Compliant?

Hello Everyone, Our new company in HYD will be somewhat similar to a BPO but with a technical focus. We will basically have chemists. Please review the salary split options below and advise if there are any errors.

Option 1
Basic - 50%
HRA - 20%
Conveyance - 20% (Are there any rules regarding this?)
Others - 10% (Do we have to specify what these "others" will be?)

Option 2
Basic - 40%
HRA - 20%
Conveyance - 25% (Are there any rules regarding this?)
Others - 15% (Do we have to specify what these "others" will be?)

Thank you very much. I have been following CiteHR for a few months now, and the amount of information here is amazing. Thanks to everyone for sharing and contributing!!!!

Regards,
Pradeep

In my opinion, the breakdown of salary components is as follows:

- Basic: 35% (max)
- HRA: Up to 50%
- Conveyance: Max 800 per month
- Medical reimbursement: Max 1250 per month
- Other (specifically - special allowance): Remaining of the salary

If your organization is willing to provide food coupons or gift coupons as a fringe benefit, the maximum amount for tax exemption is 36,000 per annum (3,000 per month).

Thanks for the reply. I have a few follow-up questions. Is the INR 800 standard? I thought it would be different if the employee has a two-wheeler or a four-wheeler. Also, the company will bear all the health insurance costs, so will that change anything?

I was informed that the "Fringe Benefit Tax" was abolished in 2009. Was it replaced by something else?

The conveyance of INR 800 is the maximum allowable amount that will be exempted in IT. Other allowances such as petrol bills, driver salary, vehicle maintenance, and LTA will be reimbursed and can also be part of the CTC. These will be given upon submission of original bills so that these expenses can be exempted as non-taxable income.

Also, note that Sodexo or food coupons on fringe benefits have been availed up to a maximum of 3000/month.

If the employee claims fuel and maintenance charges for availing of tax exemption, then they can't claim ₹800 per month towards conveyance allowance.

Food coupons are restricted up to ₹2,700 per month as tax-exempt in this FY 2011-12.

Gift vouchers up to ₹5,000 per year are tax-exempt.