Ctc Breakup - Xls Download - Appointment Letters

To all seniors,

I am working as an HR Executive. Our company wants to mention the CTC breakup in the appointment letter. One of my seniors gave me a breakup which is mentioned below:

Gross Salary - 21,000 pm
Annual CTC - 2,52,000
Bonus - 12,600 (yearly paid basic)
Basic - 12,600
HRA - 3,675
Other Allowances - 3,675

I am unable to understand how he calculated HRA & Other Allowances. Please explain to me in detail.

Hi Rani,

Generally, when we do the salary bifurcation, we keep in mind the following percentages, which help in minimizing the TDS:

- Basic - 40% of Gross
- HRA - 30% of Basic
- Conveyance - $800 per month (As per the law)
- Other Allowance - Rest of the amount (This amount can be used fully or partially as business-related expenses (Fringe Benefits) to avoid the huge taxes).

Thanks,

Gross - $500,000
Basic - 40% of $500,000 = $200,000
HRA - 30% of $200,000 = $60,000
Conveyance - $800 per month * 12 = $9,600
Other Allowances = $230,400

Hope this is clear now.

Dear Mirza,

Which law is restricting the Conveyance allowance to only Rs. 800? Many companies are paying more than that (even I am getting more). Please clarify about the restriction on conveyance allowance.

Hi Bhaskar,

No one is stopping you from going beyond, but you will only be able to get the tax exemption for $9600 per annum.

Hope this clarifies.

Hi,

Attached is the format of the CTC breakup for your reference.
Tax savings must be considered when organizing the various salary components.

Thanks and regards,
Bijay

Dear Mirza,

Neither is Rs. 800 per month compulsory, nor is it mentioned in any law. Income tax is exempted for the amount up to Rs. 800.00 per month from the office to the residence, and no proof is required.

Thanks and regards,
J.N. Modi

Venkatesh,

Where did you read that HRA is 12% of basics? HRA is 50% of basics for metro cities and 40% of basics in non-metro cities.

What you MUST know about HRA

Hi Sanjeev,

Under the Income Tax Act, Medical Allowance is a maximum of ₹1250 per month (₹15000 per year), and Conveyance Allowance is ₹800 per month (₹9600 per year).