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Is Variable Pay considered as commission?

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Mahesh R

17 Points Posted on 04 September 2025

I retired last year and got 4 lakh plus as 34 days leave encashment. My organization has considered only basic+DA (No DA actually is part of salary) to calculate exemption amount and have given me exemption to the extent of around 2.8 lakh only. As a variable pay component was also part of my salary (Paid every 6 months), I am wondering as to why that should also not be part of this calculation for exemption (Basic + DA + Commision). I was not a sales person but all employees above a certain level had this variable pay linked to company and individual performance.

can i claim more exemption based on this revised calculation of Basic+DA+Variable pay?

Replies (4)

Quick Summary

This discussion explores whether variable pay, linked to company and individual performance, should be considered alongside basic salary for tax exemption purposes, similar to commission. The original poster received a lower tax exemption than expected on leave encashment and wants to know if including variable pay in the calculation can increase their eligible exemption amount. The advice suggests that if variable pay is formally included in your Form 16 as a salary component, it can indeed be factored into the exemption calculation.