Best Salary Structure for India: What Non-Taxable Income Heads Should We Include?

I want to know the possible best salary structure for our India limited company. I want to know what types of heads we should add under non-taxable income. Please guide me.

Non-Taxable Heads. Nothing can tax them!
Sorry for a silly response to a serious question.

The following are some heads of income that are non-taxable:

1. HRA (subject to certain limits).
2. Conveyance (up to Rs. 800 per month).
3. Medical expenses reimbursement (up to Rs. 1250 per month).
4. Uniform allowance.
5. Any reimbursement of expenses.

In addition to the heads mentioned such as HRA, Conveyance, Medical, Uniform, etc., you may consider the following which also enjoy applicable tax exemptions:

Children's Education Allowance: Rs. 2400/- for two children annually is exempted from income tax.

Children's Hostel Allowance: Rs. 7200/- for two children annually is exempted from income tax.

Leave Travel Assistance: Exempted from tax 2 times in a block of 4 calendar years; present Block - January '06 to Dec '09.

Food Passes: Exempted up to Rs. 15600/- per annum.

Gift Coupons: Exempted up to Rs. 5000/- per annum.

Superannuation Fund: The contributed amount to this fund is exempted from income tax.

Regards,
Rahul Datta

Dear friends,

It is certainly uncompromising the kind of answer and picture provided to a genuine question. It brings down the objective of the forum. Let's put our heads together to discuss and provide some valuable input and knowledge to the person who has asked for help rather than providing funny pictures or making funny comments. I request all folks to maintain the objective of the forum and make this a shared house of knowledge. I hope everybody will stand by my side in this regard.

Regards,
Raghu Shekaran

I appreciate the views expressed by Raghu. As regards the original query regarding the best compensation structure, much would depend on the kind of Organization Structure you have, the kind of skill sets required, the availability of such skilled manpower in the market, and scores of other things. However, the current emerging trend is to go for a CTC-based Compensation Structure which aligns well even with the old-fashioned grade structure derived through a ranking method after proper job evaluation.

Please provide the necessary inputs so that we can respond to your question better.

Regards, Rahul Datta

Hi Meghana,

I would like to know whether telephone expense reimbursement is taxable or nontaxable.

Regards,
Meghana

I have gone through the forum and found that no one answered his query properly, and he remains back to square one. Whatever I know, I will share with you.

Non-Taxable Components in Salary Structure

- **HRA:** 50% of basic is non-taxable in Delhi, and in NCR, it is 40%.
- **Conveyance:** ₹800 per month is non-taxable.
- **LTA:** Once in a two-year block is non-taxable.
- **Telephone:** ₹3000 per month is non-taxable.
- **Children's Fees:** ₹12,000 per annum is non-taxable.
- **Medical:** ₹1250 per month is non-taxable.
- **Leased Car:** Comes under non-taxable as well.

As of now, this is what comes to my mind; if anything else comes later, I will add accordingly.

Thanks,
John