Residual Pay Choice is an umbrella concept summing up all the left over salary components after Basic Pay and DA wherein an individual employee can choose the allowances and its quantum suiting self. The components included would depend on the organisational policy and it varies from one to another. Generally Residual Pay will cover HRA, LTA, other allowances , many organisations provide for restructuring them by yourself to save tax. You will be provided a basket of allowances which can be varied percentage wise subject to certain ceiling depending on individual choice and applicability. For instance employee with school/college going children can claim Education Allowance and produce fees receipt to claim it to be reimbursement. Similarly conveyance expense, medical allowance etc.