How Can We Restructure Salary Headings for Better Reimbursement Options?

Hi, this is Priya. I am working as an HR Executive. I found this site very useful and knowledgeable. I have a doubt. In our company, we want to restructure our salary headings. Currently, we are calculating in the following heads:

- Basic - 60%
- HRA - 30%
- Travel allowance - 800
- Medical reimbursement - 1250
- Special allowance - remaining from above.

In the above, we cannot reimburse the special allowance, it seems. So, we thought to change it to communication reimbursement. This also cannot be reimbursed unless it is paid directly by the company. In such a case, my higher authorities suggested a PDR heading, i.e., personal development reimbursement. Kindly suggest to me on this. Is it fine to create a heading for PDR? If yes, what is the limit? Otherwise, suggest some other headings that can be reimbursed.

Waiting for your valuable reply. Thanks in advance.

Regards,
S. Priya

There is nothing called PDR. You should restructure the breakups as below:

Salary Structure Recommendations

- Basic: 50%
- HRA: 50% on Basic, as employees can avail more HRA exemptions.
- Travel/Conveyance: Remain at 800.
- Medical Allowance: 1250.
- You can also add food coupons.
- The remaining amount should be treated as Special Allowances.

Regards.

Understanding Personal Development Reimbursement (PDR)

PDR is used as a component by some companies. If I am right, this concept was introduced in the eighties as there used to be tax exemptions. In fact, initially, it was given for buying books, magazines, and newspapers. Later, companies started giving this as a monthly allowance under the Head Personal Development.

Adding this or any other head which your company feels is beneficial can be incorporated. However, consult a tax expert to determine whether it has any relevance today for tax saving. I suggest adding Heads only if there is going to be tax saving. Some companies do away with all such Heads and call it Flexi Allowance.

Could you please send me some documents regarding salary surveys so that I can choose a suitable methodology for conducting a salary survey within my organization?

Thank you.