Is CA a compulsory component of salary? Is there any upper limit to CA (City Compensatory Allowance)? Can we ignore this component? Instead of CA, a special allowance can be used to balance the gross pay.
Salary components such as Basic, DA, CA, and HRA form the monthly gross pay. The only exception is CCA - City Compensatory Allowance. The percentages for the other components are fixed by compliance, but is there an upper limit for CCA? Can we exclude this allowance from the gross pay? Additionally, can we incorporate a special allowance to balance the monthly gross pay?
It is not mandatory that you have to give such components only. You can allocate any component in any manner. However, it is also important to show tax exemption components for high-salaried employees.
As far as I know, CCA is not a statutory component of the pay structure. The grant of CCA arises only when employees of the same class/grade in an organization are posted in different locations, some of which are big cities with substantially higher costs of living. Therefore, it automatically becomes a special allowance and forms part of the gross salary depending on the place of work.
I believe for places like Goa, CCA is mandatory. Correct me if I am wrong.
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