Impact of increasing basic amt in salary on taxation

This query is : Resolved

AshishLimaye (Querist)
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29 October 2013 If there is increment in salary at what proportion amt should be increased in basic salary

please clarify

Ganeshbabu K

Ganeshbabu K (Expert)
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29 October 2013 IT DEPENDS
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your company may give hike to you with out increasing your basic salary also
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like they will increase da,hra,and other allowances
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if they increase your basic they have to increase their contributions to pf,esi..etc.statutory funds

AshishLimaye

AshishLimaye (Querist)
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29 October 2013 I would like to know tax implication

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 October 2013 the increase in basic salary is normally a positive to the employee. For eg it increases HRA limit, and many such other benefits.

It also increases PF amount (which is a negative for the employer as his contribution increases)

from Employee angle it is always beneficial to have increase in basic salary instead of special allowances and bonus.