Salary Structure for Higher Grade: Can You Help Me Spot Any Mistakes?

Dear All,

I am attaching the salary structure for the higher grade. Kindly review and correct me if I am wrong.

Thanks in advance.

Dear Swati, I would like to restructure the format since it is for a higher grade where the TDS rate is high. So, it is advisable to create a tax-friendly structure. Please note my observations:

1. There are certain components which are of a reimbursement nature. If you don't include them in the monthly salary and instead pay against the submission of bills/documentary evidence (monthly/quarterly/annually or as per company policy), then that amount will not be counted as taxable income, and the employee will have to bear less TDS.

2. Generally, the HRA should be 40% (Non-metro City) and 50% (Metro City), but you have shown above 50%.

3. Instead of paying monthly/annually, the LTA amount should also be paid as per LTA Policy Norms and Tax Benefit period (Block period concept). This will also reduce the tax burden of the employees.

Fellow senior members can suggest more views on the matter.

Hi Mr. Dangwal,

Kindly share with me the tax benefit on Conveyance and Medical allowance, as now both of them have been clubbed into the Standard deduction. How can I show these (medical and conveyance) allowances in the salary structure? I guess we can skip these components because of the standard deduction.

Also, I request you to kindly share with me a salary structure with minimum tax burden on the employee side and minimum liability on the employer side.

Thank you.