Is Our DA and HRA Policy Fair Across All Employee Levels, or Should We Revise It?

Policy on DA and HRA for Different Cadres

In our organization, we follow the policy that DA is applicable only until the Assistant Manager cadre. From the Manager cadre onwards, we don't show or give DA, but it will reflect in HRA (including the amount of DA). Is this the correct method/policy, or should we have HRA and DA for all cadres of employees?

Payslip Structure for Executive Positions

For example, an employee in the position of Executive Director/Director, our payslip will include Basic Pay, HRA, TA, Other Allowances, and Gross Pay. Is this correct, or could you suggest which is the correct approach? Could you also provide a payslip format? Employees are covered under PF and ESI.

Dear Kritika,

Is there any specific reason to not show DA in the salary slip? If not, then you can surely show it as a part of the salary slip.

Organization policy will have a systematic basis when designing or making any policy.

Here, showing DA and HRA together is odd as they have different tax treatments. Lumping the amount together is most unhelpful for an employee to understand his payslip and work out his tax liability.

Dear Colleague,

To give Dearness Allowance (DA) up to a certain level and not to others is the policy decision of the organization.

As regards the payslip, include DA wherever applicable. I don't understand why it should clash with House Rent Allowance (HRA) in the payslip, as both are two different components and they should appear in the payslip as per applicability.

Regards,

Vinayak Nagarkar HR Consultant

Hi,

Minimum wages specify Basic & Dearness Allowances. Also, companies having more than 100 employees need to pay HRA at 5% of Basic + DA. Additionally, HRA has certain taxation benefits for persons staying on rent and producing rent receipts. Therefore, it is advisable to show Basic, DA, and HRA as separate items on the payslip.

Thank you.

Regards,
R.H. Kavarana
HR Manager