What is Salary Structure Design?
- Salary Structure Design
- Salary Structure Design determines the mix of components in an employee's CTC — balancing tax efficiency, statutory compliance, flexibility, and take-home pay optimisation.
Tax-Efficient Salary Structure
Typical Indian salary structure: Basic (40–50% of CTC), HRA (40–50% of Basic — exempt from tax with rent receipts), Special Allowance (taxable filler), Medical Reimbursement (₹15,000 p.a. exempt), LTA (Leave Travel Allowance, exempt twice in 4 years), Mobile Reimbursement. Statutory: PF on Basic, ESI on gross if applicable.
CTC vs Take-Home
CTC (Cost to Company) = Gross Salary + Employer PF + Gratuity Provision + Insurance + Other Benefits. Take-Home = Gross Salary − Employee PF − TDS − Professional Tax − ESI. A ₹10L CTC employee may take home ₹65,000–₹70,000 per month depending on tax regime and investments.
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