Understanding CTC Structure: How to Optimize Allowances and Benefits for Everyone?

CTC Structure Review and Queries

Herewith, I have attached the CTC structure under review in my company. I want to clarify:

A. What is the permissible limit of City Compensatory Allowance? Currently, I am using it as a balancing figure.

B. Is PF applicable to City Compensatory Allowance?

C. Is PL a part of CTC? Is it valid or not?

Please provide some suggestions to make it more lucrative from the employee, company, and income tax point of view.

Regards,
Nishikant

City Compensatory Allowance (CCA) and Provident Fund (PF) Contribution

CCA is not considered for PF contribution.

Paid Leave (PL) and Cost to Company (CTC)

PL is not part of CTC in many organizations. However, no guidelines are available to determine the CTC. It varies from company to company.

Regards,
Pon

You can increase the HRA up to 40% of basic in the case of non-metros or 50% for metros so that the IT exemption can be claimed. Medical allowance can be increased to Rs. 1250 per month as it is tax-free subject to the production of bills. Similarly, LTA can be increased. Try to reduce special allowance as it is fully taxable.

Regards,
Pon