HRA & Salary Components

Your CTC (Cost to Company) is ₹12 Lakhs. But you get only ₹80,000 in hand. Why? Let's decode the salary structure.

1. Basic Salary

• The core component. Usually 40-50% of CTC.
• Fully Taxable.
• PF and Gratuity are calculated based on this.

2. HRA (House Rent Allowance)

• Given to pay rent.
• Tax Exemption: Minimum of:
  1. Actual HRA received.
  2. 50% of Basic (Metro) or 40% (Non-Metro).
  3. Rent Paid - 10% of Basic.
• Tip: If you live with parents, pay them rent (digitally) and claim HRA.

3. LTA (Leave Travel Allowance)

• For travel within India (Air/Rail fare only).
• Can be claimed twice in a block of 4 years.
• You must actually travel and submit tickets.

4. Special Allowance

• The "Balancing Figure".
• Fully Taxable.
• Companies dump whatever doesn't fit elsewhere here.

5. Standard Deduction

• Flat ₹50,000 (now ₹75,000 in New Regime FY25) deduction for all salaried employees.
• No bills needed.

6. Professional Tax (PT)

• State Govt tax. Usually ₹200/month (₹2,500/year).
• Deducted before tax calculation.

7. Provident Fund (PF)

• Employee Share: 12% of Basic (Deducted from your salary).
• Employer Share: 12% of Basic (Part of CTC, but not in-hand).
• Tax: Exempt under 80C.

HRA Exemption Calculator

Calculate your HRA tax exemption:

7-Day Action Plan

Day 1: Download your latest Payslip. Identify Basic, HRA, and Special Allowance.
Day 2: Calculate your HRA exemption using the calculator above. Are you claiming full benefit?
Day 3: Check if your company offers "Food Coupons" (Sodexo). They save tax on ₹26,400/year.
Day 4: Ask HR if you can restructure salary (e.g., opt for NPS or Car Lease).
Day 5: Understand "Gratuity". (You get it only after 5 years of service).
Day 6: Check the PF number (UAN) in the payslip. Login to EPFO portal to see balance.
Day 7: Compare your "In-Hand" vs "CTC". The difference is "Forced Savings" (PF) + Taxes.

Quiz

💡 Final Wisdom: A higher Basic Salary means higher PF (good for retirement) but lower in-hand salary today. Balance is key.