Annexure B

Know Your Pay components

Component

Description

Income Tax Treatment

Monthly Components

Basic Pay

This is the base component of your CTC which forms 35 % of your

CTC

Basic salary would be fully taxable in the hands of the employee

This component is tax free subject to production of a valid rent

receipt as per section 10(13A) of the Income Tax Act.
HRA is taxable subject to exemption as per the provisions of the
Act. Accordingly, least of the following would be exempt:

House Rent Allowance

(HRA)

House Rent Allowance is an amount equivalent to 40% of your

Basic Pay for meeting the expenses towards rent for a dwelling
place.

40% of salary (50% in case the house is situated in Mumbai,

Delhi, Kolkata or Chennai);
Actual HRA received; or
Excess of rent paid over 10% of salary

The rent receipt to capture the PAN No: of the landlord if the rent
payment is more than 180000 per annum.
The tax benefit on this component is inapplicable for those
employees who are receiving tax benefit under section 80C of the
Income Tax act against the principal repayment paid towards loan
obtained for construction/purchase of house for self-occupancy.
However, if the aforesaid property is rented out, then employee
can claim exemption for home loan as well as tax benefit on HRA

Children Educational
Allowance

It is exempt in the hands of the employees to the extent of INR 100

Payment of children education allowance is made to meet the per month per child for a maximum of two children. The Company
education requirements of the employees children
should maintain documentation like Number of children, age, child
name & school name to grant exemption for such allowance.

Medical Bill
Reimbursement

Tax free perquisite under Section 17(2) of the Income Tax Act, upto
Rs. 15, 000/- per annum (1,250/- per month) subject to production
of medical bills. Bills pertaining to availing allopathic or ayurvedic
This reimbursement is paid by the employer to meet any treatment and purchase of prescribed medicines alone can be
expenditure incurred by the employee on his medical treatment/ considered for reimbursement.
expenses or treatment of any member of his family.
In case, the employee doest submit any bills/ bills to the extent of
15000 during the year, the whole/ balance amount would be paid
as taxable salary.

Electronic Food Card

This is a new component introduced in your pay structure. The

Tax free perquisite under Section 17(2) of the Income Tax Act up to
amount pertaining to this component will be loaded every month
Rs. 18, 000/- per annum (1500/- per month). The limit that has
into an electronic card provided to you. This card can be used at
been fixed internally for this component is Rs. 1,250/- per month.
food and beverage counters.

Employees provident fund

Contribution @12% of Basic salary is credited by the Employer to

the Employees PF account.
This is retrials benefit and it becomes payable to an employee at
the time of retirement or resignation upon completion of 5years.

Gratuity
4.81% of your Basic Pay is allocated towards Gratuity and payable
as mentioned above.
Retiral benefit provided @ 15% of your Basic Pay. If the employee
Superannuation/Allowance
hasnt opted for this benefit, then the same will be paid as
in lieu of superannuation
allowance in lieu of superannuation in the monthly payroll.

Flexi Basket Pay

This component is the remaining portion of your CTC after deriving

all the other fixed CTC components.
Tax friendly components such as Car EMI, Fuel, Driver,
Maintenance of Car and business attire can be derived out of flexi
basket pay.
Note: Company Car will be provided based on your request. The
driver needs to be managed on your own.

Contribution by the Employer @12% of Basic salary is exempt from

the Income Tax Act.
Similarly, contribution by the employee is tax free under section
80C of the IT Act.
This component is tax free under section 10(10) of the IT Act when
paid up to a maximum of Rs.10 Lakhs per annum.

Tax free perquisite up to Rs. 1, 00,000/-under Section 17(2) of the

Income Tax Act. Remaining will be treated as perks (taxable).It is
also taxable in the hands of employee at the time of withdrawal. In
case of payment as allowance in lieu of superannuation, it is fully
taxable at the hands of the employee.

Fully taxable as flexi component.

In case of tax free components mentioned in previous column,
please refer to Annexure - C (IT rules on motor car as perquisite)
for detailed understanding

Annual Components

Leave Travel Allowance

(LTA)

This amount is paid to the employee to proceed on vacation on

leave with his family.
This component forms 8.33% of the annual basic pay and the
amount pertaining to it is payable once in two years.

The exemption under section 10(5) of the Income Tax Act, is

available in respect of travel expenses incurred by the employee for
himself and his family in connection with his proceeding on
vacation leave to any place in India. The exemption is restricted to
travel expenses for any two journeys performed in a block of four
calendar years. The current block starts on 1st Jan 2010 ends on 31st
Dec 2013.
Tax free upon production of bills as per policy on LTA.
Can be claimed at the end of one year without bills, but would be
fully taxable. Please refer LTA policy attached overleaf.