Is It Right to Exclude Dearness Allowance from Our Salary Structure? Seeking Insights

While defining our company's salary structure, we have not made a column for dearness allowance. I remember clearly reading about 2 decades ago that DA is meant for government or multi-location companies because they don't change the salary structure every year, and they have many employment/posting locations. Are we correct in defining our salary structure?

Meghnad Shah
Managing Director
Frontline Electronics Ltd
Pune and Bengaluru

Dear Mr. Shah,

While defining the salary structure, two major points need to be considered. First, the salary structure should not be less than the Minimum Wages (as per applicable laws on the establishment). Secondly, it should be cost-optimized, taxation-friendly, and maximize in-hand salary.

Dearness Allowance (DA) in Private Sector Jobs

The Dearness Allowance (DA) is applicable in private sector jobs as well. In some states, the DA is a compulsory part of the Minimum Wage structure. In Karnataka and Maharashtra (in your case), it is applicable. Therefore, you should include the DA in your Salary Structure.

I hope I am clear to you. If you have any specific queries related to forming a salary structure (keeping in view taxation, statutory compliance, maximized in-hand salary), please share with detailed data so that fellow members can share their views.