Sunil Jain (DGM) (25 Points)
17 April 2010My company has given an option to choose BASIC salary in the compensation plan. The BASIC SALARY can be chosen as 25% to 40% of the CTC. I stay in metro and am having 30 lacs CTC. I pay a monthly rental of 45000/-. What is the optimum level of BASIC salary that I should choose in order to minimise tax . If I choose a higher Basic, then will it have any effect on other components like increased PF/ retirals? How will my take home salary and tax be affected> Pls guide.......
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 17 April 2010
You should go with Higher Basic Salary.
For Example if u choose say 40% as basic your basic salary will be 40% of 30LPA =Rs.12LPA
PF will be Rs. 1.44 Lacs
HRA can be claimed as
lower of following
Rent paid -10% of salary = 45K*12- 10% of 12Lacs = 420000
50% of Salary (coz in metro) 6 lacs
actual rent paid 540000
regards,
ratan
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 17 April 2010
Try to claim allowances (like car allowances, special allowance, medical allowance and other allowances) on reimbursement basis, as reimbursement of such expenses rather than as allowances also reduce your tax liability to a great extent.
You can claim deduction U/s 80D for mediclaim as well.
regards,
ratan
Alex Sharma
(CA & ICWA Final student; CS & CFA completed)
(194 Points)
Replied 17 April 2010
You are surely a rich man
Sumit K. Garg
(Article Assistant)
(40 Points)
Replied 17 April 2010
Dear Sunil,
You should choose 40% basic of CTC. because PF amount (employer contribution is tax free and employee contribution is deductible u/s 80C), HRA exemption also depends on your basic salary.
So it is beneficial from tax point of view.
Regards,
Sumit K. Garg
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