Understanding Salary Structure: What Governs Its Breakup and Percentages?

Dear Seniors, please let me know on what basis the salary structure has been created. Is there any act that governs the breakup of the salary structure and its percentage on the salary? I am seeking guidance on this. Expecting your reply.

Regards,
Rajini

The salary structure has been created with consideration for tax exemption. There is no standard structure, but generally, it is prepared as follows:

- Basic = 50% of Gross
- HRA = 60% of Basic
- Conveyance Allowance = 800/-
- Medical Allowance = 1250/-
- Remaining amount as Special Allowance

Thank you.

Regards

You can have the CTC structure under the following heads:

DEDUCTIONS

- Basic: 40% to 50% of basic
- PF Company Contribution
- HRA: 5% to 40% or 50% of basic
- ESI - Yes or No
- Conveyance: 800
- Professional Tax
- Personal Allowances
- Bonus
- Medical Allowances: 1250
- Mobile
- Vehicle Maintenance
- Others
- LTA
- Income Tax (per month)

CTC

Dear Jeevarathnam, thank you for your reply! Please let me know how the percentage was derived. Was it our own decision, or is there a thumb rule to follow? Is this common for all states or not?

Thanks and Regards,
Rajini

Those percentages are based on our own decision. There is no thumb rule. It is just to save employee tax. 

There is no clear-cut policy on salary breakup. Individual managements will evaluate a policy according to the industry type. Some industries will follow 60% and 40% as basic and other allowances. Others may be 40% and 60%, as per the decision of management. There is no hard and fast rule.

Regards,
D. Gurumurthy