Navigating Salary Restructuring: How to Make It Tax-Friendly and Boost Take-Home Pay?

I'm working on restructuring the salary components in my present company. My objective is to make it more tax-friendly and ensure better take-home pay. Could somebody help me understand the following points in a little more detail?

1. Superannuation Taxability

If superannuation is included in the monthly salary, is it taxable to the employer or employee? I believe it's taxable to the employee, but if so, is it fully taxable or partially taxable?

2. Allowances in Monthly Salary

Can we add two allowances like Education allowance and Hostel allowance, totaling Rs. 400, and show them in the monthly salary?

3. Medical Claim Insurance Policy Limits

Is there any specific amount or percentage limit on the Medical Claim Insurance policy? In my present company, we provide it on an annual basis as 50% of the basic salary. Is there a particular percentage specified in the Income Tax Act?

Thanks,

Madhuri

Hi Madhuri,

1) If you are paying superannuation on a monthly basis, then it's taxable salary for the employee.
2) You can't add 2 allowances together.
3) There is no percentage on insurance policies. But employees can avail of tax exemption on insurance under 80C, totaling up to 1,50,000, including all savings components under 80C, medical insurance exemption under 80D, etc.
4) There are other exemptions such as HRA, medical allowance up to 1250/- PM, conveyance allowance 1600/- PM.