Best salary break up by which we can reduce down the TDS amount

Hey Friends,
This is a comp n ben query...
In a usual salary break up - the the component called "Special Allowance" is a balancing figure. The practise followed across the industry is that the the amount for special allowance (i.e. the balancing figure) should not be more than the "Basic OR Basic+Dearness Allowance".
1. I m not sure whether it should not be more than only Basic or combination of Basic+DA
2. I would like to know if there is any law supproting this practise.
Because as i understand - If the basic is less, then it has a tax implication. In such case i would have to refer to the correct reference/clause as per law which will support the practise.
Looking forward for some help on the above raised query.
:icon4:
Thanks in anticipation![/b]

Hi,
In reference to your query, i would like to clarify that, there is no law which states that spl allowance should not be more than Basic. But as a practise , most of the companies follows the rule of giving basic in between 30-50% of CTC.( mind it, there is again no law for that).
katyana

Hi
There is no law.
Even IT talks about certain amounts for exemptions.
what exactly is requirement?
Siva

Dont worry about it..there is no law that i am aware of..sp allow is always considered as a balance amount...

Basic amount is kept 30-35% of total so as to save on the Gratuity componenet. Gratuity is payable on Basic+DA and applicable for those who complete 5 years continuos service. Also if Basic is higher outgo on PF is also higher and it reduces the take home componenet. Basic also has bearing on Bonus payable. All this things are to be considered while working out a pay structure, with in the agreed CTC. Employees are more concerned with what they get in hand and higher retained earnings wil reduce monthly take home. Basic has no connection with income tax. Tax is caluculated based on existing tax laws and exempted components at present are HRA (with some conditions if rent receipt is produced), Transport allowance-Max Rs800 per month, Medical allowance- Max Rs1250 per month and LTA as per applicable conditions once in two years.
Knpk

Dear All
Recently we appointed vice- president - Finance in our company. We
follow Basic+DA = 40% , HRA =20%, CCA = 15% , Spl Allow = 20% and
washing allow=5%.
What could be the new break ups for VP level appointment that includes tax benefits.Please suggest me....
Regards
G.Tamizhannal
[Login to view]

Guys,
Check this how does this sounds for the salary breakup:
Please let me know if in the % column has a limit set by Income tax:
Monthly Breakup

Gross 100% 100% - (825+800+1250)

Basic 46.63
HRA 20.98
Exempted CCA 825
Exempted Conveyance Allowance 800
Exempted Medical Allowance 1250
Exempted Mobile Allowance 2.3
Exempted PDR Allowance 2.77
Exempted Sodhexo Pass 5.54
Exempted LTA 4.61
Other Allowance 17.17