Delhi Minimum Wages

This query is : Resolved

Rakesh Sharma (Querist)
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15 June 2022 Dear Experts,

As we know minimum salary in DELHI is 21,800/- for graduate employee. Can we split this salary as per below : -
1) Basic Salary : 14,000
2) HRA : 5,000
3) Other Allowance : 2,800

Kindly advise.

Rakesh Sharma

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 Yes, you can structure an employee's salary as per the components you mentioned:

1. **Basic Salary**: Rs. 14,000
2. **House Rent Allowance (HRA)**: Rs. 5,000
3. **Other Allowances**: Rs. 2,800

This structure is commonly used in many organizations to optimize tax benefits and meet legal requirements. Here are a few points to consider:

- **Basic Salary**: This forms the core of the salary structure and is used for calculations such as provident fund (PF), gratuity, and other statutory deductions. It is typically around 40-50% of the gross salary.

- **House Rent Allowance (HRA)**: HRA is provided to employees to meet rental expenses for accommodation. It can be tax-exempt up to a certain limit, subject to conditions laid down by the Income Tax Act.

- **Other Allowances**: These can include conveyance allowance, medical allowance, special allowances, etc. These allowances may be taxable or exempt depending on their nature and as per Income Tax rules.

When structuring salaries, it's essential to ensure compliance with applicable laws and regulations, including minimum wages set by state authorities. The components should be clearly defined in the employment contract or salary structure document provided to employees to avoid any confusion.