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Want to know the it rule for basic salary, if any ?

Mahendra (Manager- Finance & Accounts) (51 Points)

19 July 2012

Dear All,

i want to know is there any rule for Basic salary & other component. If i want only two head of my salary (Baisc & HRA) then what will be the effect ? Is it possible ?

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2 Replies

sachin (ARTICLES) (434 Points)
Replied 19 July 2012

The main object of company is to give more be tax benefit to employee. So break up the salary in such a way that tax liability of the company as well as employee is reduced. There is no such rules.

Usually break up is done for tax management purpose.

For exmple - If u give 800 pm as basic salary. or if u give the same as transport allowance. then the same is exempt in case of employee.

There are many strategies for tax management.