Salary Breakdown Help: How to Make Rs 15,000 and Rs 20,000 Tax-Free?

Can someone give me a break-up for a Rs 15,000 salary and a Rs 20,000 salary with the following components:

1) Basic
2) HRA
3) Conveyance

The break-up must be tax-free.

Thanks...

You can use the following salary breakups:

Salary Components

- Basic Salary
- H.R.A
- Conveyance Allowance
- Medical Allowance
- Business Attire Allowance
- Vehicle Maintenance Allowance
- Children Education Allowance
- Books & Periodicals Allowance
- Telephone Reimbursement
- Food Plus Cards

I have corrected the spellings and grammar in your text and formatted the list of salary components with proper line breaks. If you need any further assistance, feel free to ask!

For salaries of ₹15,000 and ₹20,000, you should structure them as follows:

Salary Structure

- **Basic:** 50% of Gross
- **HRA:** If you are located in a metro city, HRA should be 60% of Basic
- **Conveyance:** ₹800
- **Medical Allowance:** ₹1,250
- **Special Allowance:** The remaining amount should be designated as Special Allowance

For a Gross Salary of ₹20,000, the individual will not fall into any tax brackets.

Regards

Thank you, Jeevarathnam! Is the remaining Special Allowance in the above salary structure completely exempt from tax? I mean, what will be the limit for tax exemption for items falling under the remaining Special Allowance?

In the above salary structure, the HRA component is "if your place is in Metros, HRA is 60% of Basic." However, I believe for metros, it should be 50%.

Structure Requirements

Check the structures required by you.

For related tax computations, go to the weblink provided therein.

Regards

HRA Exemption as per Section 10(13A)

As per Section 10(13A), HRA exemption is availed as below:

- Least of the following is exempt:
i) 50% of Basic + DA for Metro cities (for Non-Metro cities, it is 40%)
ii) Rent Paid less than 10% of Basic + DA
iii) Actual HRA received

Salary Break-Up for Small Companies

Basic: 10,000.00 13,000.00
HRA @ 40%: 4,000.00 5,200.00
Conveyance @ 10%: 1,000.00 1,300.00
Total: 15,000.00 20,000.00

This is a very simple method. Keeping HRA at 40% and Conveyance at 10% of Basic works well for small companies.

Regards,
Sivasankaran

Yes, that's what I asked - that it's 50% for the metros. So, in the salary breakdown given above in one of the replies as:

- Basic: 50% on Gross
- If your place is in Metros, HRA is 60% on Basic
- Conveyance: 800
- Medical Allowance: 1250
- Remaining as Special Allowance

Is it valid to give HRA as 60% on basic?

There is no mandatory requirement regarding the percentage of Basic or allowances. Just ensure that Basic is not less than the minimum wages prescribed by your state government. The 50% or 40% are taken to maximize tax savings. You can certainly take HRA as 60% of Basic or even higher.

Regards,
Rajiv