Understanding Salary Breakup: Can Someone Explain Allowances and FBT in a 50,000 CTC?

My query is about the allowance and its calculation, including FBT benefits given to employees as part of their CTC. Can anyone explain the salary breakup of 50,000 as follows:

Basic
HRA 50%
Conveyance 800
PF (employee) 780
PF (employer) 780

Additionally, I would like to know the details of the following allowances:

- Helper Allowance
- Uniform Allowance
- LTA
- Medical
- Special Allowance
- Education Allowance

Hi,

Here it goes: Basic (@40% of CTC) = 20000 HRA (@50% of Basic) = 10000 Conv. Allow = 800 (tax exempt up to 9600 pa) Medical Allow = 1250 (IT Exempt up to 15000 pa) Special Allow = 5000 Children Education Allow = 200 (Maxim 2400 pa (2 children); tax exempt subjected to School/college going children) PF = 780 + 780 = 1560. Helper Allow = 2000 Uniform Allow = 3000 LTA = 6190 (tax exempt twice in a block of 4 yrs) Hope this will help you out.

Regards, Rachna Hyderabad

Thanks,
Its right but I wanna know calculation of other allowance.
Because I have to calculate packages for 20-25 employees for my company. I need % , calculation of FBT. Etc…..

Hi Meenu,

Let me know what other allowances you want to calculate.

Further, you can also have Medical Reimbursements, Mobile Allowances, or Reimbursement which are useful in getting tax exempt, as these amounts will be reimbursed by the company on the production of bills by the employee.

Regards,

Rachna

Dear Rachna,

I want to know if there is any freeze limit on the percentage including FBT benefit. For example, Basic 40% and HRA at 50% of Basic. Could you please provide the percentage ratios for the following allowances and their calculations:

- Helper Allowance
- Child Allowance
- Uniform Allowance
- LTA
- Special Allowance

This information will help me calculate the salary breakup for amounts exceeding 30k to provide FBT benefits to the employees.

Thanks,
Meenu

Dear Meenu,

For every breakup, the maximum limit up to which tax is exempt per annum is mentioned. You only have to calculate the per month amount against each earnings heading. Furthermore, for Uniform allowance and Helper allowance, you need to check the definition of why your company is providing them. Additionally, you might allocate certain percentages to them or consider them as an equalizing factor (i.e., an amount to be allocated to equalize the CTC per month).

Special allowances are 100% taxable. You need to allocate the amounts in such a way that the employee has the maximum take-home criteria.

If you have any queries, feel free to contact me.

Regards,
Rachna

Hi,

You can calculate the salary breakup as:

Basic: 40% of the gross

HRA: 50% of Basic

Conveyance: 800/-

PF: 12% of Basic

Medical: 1250/- (tax-free component)

Sodexo: 2500/- (if you have this facility) (tax-free component)

Education Allowance: 200/- (tax-free component)

Communication: 2000/- (tax-free component)

Vehicle: 1200/- (tax-free component)

LTA: 25000/- (exempted twice in a block of 4 years)

Personal Allowance or Special Allowance or Other Allowance: Balance (this is a taxable component)

FBT will be calculated on components that are tax-free, such as Sodexo, education, communication, and vehicle.

The sum of all the tax-free components * 6.798/100 = FBT.

The salary structure for 50000 is as follows:

Basic: 20833

HRA: 10417

Conveyance Allowance: 800

PF: 2500

Sodexo: 2500

Medical: 1250

Education Allowance: 200

Communication: 2000

Vehicle: 1200

Personal Allowance: 8300

LTA: 25000

FBT: 469

Monthly: 50000

Annual: 625000

It depends on the employer whether he pays the FBT or includes it in the CTC, but in most companies, the FBT is paid by the employer.

Hope this helps you.

Thanks,

Uttama

Hi Uttama,

Most of the matter is clear now, but what is this Sodexo? Please explain. Communication means mobile allowance; just tell me.

In our company, FBT is included in CTC. FBT burden is on the employee, and it is part of CTC.

Best Regards,
Meenu

Meenu:

Sodexo and Accor coupons are meal and gift coupons provided to employees to help them avoid taxes (amounting to Rs. 1250/-).

Thanks,
Mirza

Hi Meenu,

Mirza is right, they are meal vouchers/gift vouchers which are accepted in many of the shops and restaurants. If the company orders the coupons, they provide a directory of where these coupons are accepted. The amount can vary from 1250/... It depends on the company.

Yes, if the employer does not pay the FBT, it is added to the CTC. As I mentioned, in most organizations, the employer either pays or does not provide an option for these components. They usually have a simple salary structure consisting of Basic, HRA, Conveyance, etc. Medical and the rest are added in some other taxable components.

Communication is a mobile allowance paid upon producing the supporting bills.

I hope this is clear.

Thanks,
Uttama

Hi,

I have one query about this. These are several allowances. However, in case we have so many allowances, does not ESI go up since it is calculated on the gross salary, i.e., (BASIC + HRA + Allowances) or have I got it wrong?

Thanks,
Sagarika

Hi Uttama,

I would like to know how you arrived at a basic salary of 20833 because 40% of 50000 is 20000. Please let me know.

Dear All,

Can you please provide me the definition of Special Allowance and Personal Allowance? As per the salary breakup from my company, they give me Personal Allowance and Special Allowance.

Regards,
Hemant

Hi all,

It's urgent, please. Do we need any payment proof from employees against Helper Allowance paid to them?

Regards,
Harpreet

Hello,

This is Mamta Sharma. I would like to seek help in understanding if there are any criteria for creating a salary breakdown. What are the components that need to be included in a salary structure?

What is the medical benefit? Should this be for actual illness, or can it be given as a monthly benefit?

---

The medical benefit typically refers to the coverage provided for medical expenses incurred due to actual illness or injury. It is designed to assist employees in managing the costs associated with healthcare services, treatments, and medications necessitated by their health conditions. In some cases, employers may offer medical benefits in the form of a monthly allowance to help employees cover healthcare expenses. This can provide employees with flexibility in managing their medical costs and accessing necessary treatments.

Hi Sritha,

I would like to know which documents are required to provide proofs for reimbursements/tax exemption from the below-listed allowance.

Regards, Sritha

Hi all, we are a startup and I need urgent help in designing the salary structure for an employee with an 8 LPA salary. This should include the Basic (40% + HRA) and allowances like office attire, vehicle fuel, telephone, and internet. What is the maximum amount we can allocate for office attire?

Thanks in advance.