city compensatory allowance

CCA is fully taxable and is added to the income of the employee for tax calculation purpose.

There is no formula for CCA. It is entirely at the discretion of employers to determine the pay structure it follows, i.e. they can pay consolidated salaries also or can divide the salary into basic plus allowances.

The primary criterion taken into account while computing CCA by employers is the cost of living index in a particular city and their respective employment policies. In a private organization where different categories of employees have different pay scales, City Compensatory Allowance is paid as a fixed amount and not as a percentage of the basic pay.