Residual Pay Choice is an umbrella concept summing up all the leftover salary components after Basic Pay and DA, wherein an individual employee can choose the allowances and its quantum suiting themselves. The components included would depend on the organizational policy and vary from one to another. Generally, Residual Pay will cover HRA, LTA, other allowances. Many organizations 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, an employee with school/college-going children can claim Education Allowance and produce fees receipt to claim it for reimbursement. Similarly, conveyance expense, medical allowance, etc.