Know Your Salary Components

Every month all of you will get your salary slip and  find many terms like Basic, HRA, DA etc.,  Any time  have you tried to understand these terms????? 

Salary  structure is made up of many components some are monthly and some are annual.  Here you will find some common components used in the company.   It may vary from  company to company.

1. Basic  

  •  Core part of the Salary.
  •  Many Components and Deductions are  Calculated based this component [PF – 12%  Basic salary].
  •  Depends on the Grade with in the Company structure. 
  •  Paid Monthly and is Taxable.

2. DA – Dearness Allowance

  • Paid to Compensate for increase in the General Cost of Living due to inflation.
  • Paid Monthly and is Taxable.                

3. Incentive / Bonus

  • Paid depending on the Employee’s Performance [Reward to Employee].
  • Incentive – Paid Monthly.
  • Bonus – Paid Monthly or Yearly.
  • Note: Both are Taxable.

4. Conveyance Allowance

  • Paid to Meet the Transportation Expenses.
  • Paid Monthly and is Taxable.
  • Note: Upto Rs.10000/– it is Tax-Free

5. House Rent Allowance (HRA)

  • Paid to Meet Expenditure on Renting a House [Calculated based on Basic Salary].
  • Paid Monthly and is Taxable.

6. Medical Allowance [Reimbursements]

  •  Paid to help the Employee with the amount that  he spend on Medical Treatment or Medicines.
  • Paid Monthly or Yearly and  is Taxable.
  • Note: Receive Reimbursement of your medical expenses against submission of bills is Tax-free [Up to 15,000 per year].

7. LTA / LTC [Leave Travel Allowance]

  • Paid to encourage the employee to travel with his Family on vacations.
  • Paid Yearly and Tax-free [Subjected to certain condition].

8. Vehicle Allowance

  • Paid to Employee to Maintain his Vehicle.
  • Paid Monthly and is Taxable.

9.  Telephone / Mobile Allowance

  • Paid to Maintain Telephone / Cell phone [To pay the bills].
  •  Paid Monthly and is Taxable.

10. Special Allowance

  • Paid to employee as a part of  his Salary.
  • Paid Monthly and is Taxable.

       Hope it will help you to understand the salary structure in better way.

Happy Salary Time

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12 thoughts on “Know Your Salary Components

  1. My daughter shared this with me. Your blog is very good with all the information we need to know and we normally ignore .Good.Keep up the good work

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