How to Structure a Tax-Free Salary of Rs. 2 Lakhs for a Bachelor Employee?

Salary Structure for Tax-Free Income

What salary structure can be given to an employee rewarding him with a gross of Rs. 2.00 lakhs per annum and yet keeping him free from any tax burden without him requiring to invest in any scheme, policy, or fund? The concerned person is a bachelor (not married) male, and his family is not mainly dependent on him.

A probable solution which I thought of would be to reward him with a salary of Rs. 15,000 per month along with a conveyance allowance of Rs. 800 per month. That is, a basic of Rs. 180,000 + Rs. 9,600 conveyance per annum, but it comes to only Rs. 189,600, leaving a shortfall of Rs. 10,400.

For the financial year 2011-12, please suggest any further additions or alternative solutions for the above.

Thanking all in advance.

Regards

Tax Exemptions on Salary Components

HRA up to 50% of basic salary in metros or 40% in non-metros is tax-exempt, subject to the production of rent receipts. Medical assistance up to ₹15,000 per annum (for self and dependents) is tax-free, subject to the production of bills.

Regards,
Pon

Hi sir, I need to suggest a new salary structure for my company that is more tax-beneficial. I need to know how I can decide the different salary component percentages in the bifurcation of the gross salary.

Current Salary Structure

Currently, we are using the following structure:
- Basic: 40%
- HRA: 30%
- Special Allowance: 30%
- Conveyance Allowance: Fixed - 800
- Medical Allowance: Fixed - 1250

Please advise on how I can use different components/allowances to provide more tax benefits to my employees.

Thank you,
Trupti