How Do You Break Down a 20k Monthly Salary into Basic, HRA, and Other Components?

Salary Calculation Breakdown

Please help me understand how to calculate an employee's salary in the company. Let's assume the employee is receiving 20k per month. I would like to determine the breakdown for basic salary, HRA, medical, travel, etc. What percentage should we apply for each component in this salary calculation?

Typically, in a company, the basic salary ranges from 30% to 60%. I am also interested in knowing the percentages for HRA, travel, medical, and other components.

Kindly provide me with the details of the salary calculation percentages so that I can share them with my superiors.

Regards,
Chaitanya
Assistant-HR

You mentioned 20k per month. Is it net pay, gross pay, or CTC? Based on that, we shall prepare. Moreover, there is no standard formula for structure.

General Salary Structure

Generally, you should take the basic as 50% of the gross pay, 40-50% of the basic as HRA, Rs 800/- as conveyance/travel allowance, Rs 1250/- as medical allowance, and the remaining as a special allowance.

Just to add information - If it is a metro, then the HRA up to 60% of the basic pay is tax-free, and medical reimbursement up to Rs. 15,000 per annum is non-taxable in case of bills provided.

While LTA will be Rs. 1250 (above Rs. 1250 is taxable), the special allowance will be the difference amount of gross pay.

Salary Calculation and Structure

Please find attached the file regarding salary calculation and salary structure.

Regards,
Shankar

I appreciate your additions, but to the best of my knowledge, HRA is a maximum of 50% of the basic salary in metros. Can anyone validate this?

HRA Exemption from Tax

HRA exempted from tax is the least of the following:

1. The actual amount of HRA received.
2. 40% of the basic salary. This increases to 50% if you are renting out the house in metro cities like Delhi, Mumbai, Chennai, or Kolkata.
3. Rent paid minus 10% of the salary (basic component + dearness allowance).

Regards,
Swati Virmani

Basically, salary has two major components: 30% of basic as HRA and 70% of gross as Basic to make things easy. As for Medical, it can be a fixed amount, i.e., $800, and traveling can also be fixed at $1800, with the rest balanced by other allowances. For all purposes, the deduction from salary on account of PF has to be on Basic and ESIC on Gross. Hope this solves your query.

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Regards, Priyanka