How Can We Create a Tax-Friendly Salary Structure to Maximize Employee Savings?

Currently, the organization still follows a very simple salary structure. With employee salary hikes, it becomes imperative for the company to introduce a tax-friendly structure. Please suggest an ideal salary structure to ensure maximum tax savings for employees.

Here are my suggestions:

Limit the basic salary to 30-35% of the total package. Additionally, consider introducing the following components if they have not already been included:

1. HRA (House Rent Allowance)
2. Conveyance Allowance
3. Children Education Allowance
4. EPF (Employee Provident Fund)
5. Medical Reimbursement
6. Leave Travel Allowance
7. Medical Insurance
8. Meal Card

These additions can enhance the overall benefits package for employees. Thank you for considering these recommendations.

Increase the basic salary by up to 50%, which will, in effect, increase the HRA, PF contribution, and terminal benefits.

Pon