Salary Structure

Posted in Human Resource Terms, Total Reads: 19581

Definition: Salary Structure

The structure of the salary being offered, in terms of the breakup of the various components that constitute the compensation is called as salary structure.

The usual components include:

  • Basic Salary:It is the taxable base income and generally not more than 40% of CTC.

  • House Rent Allowance: The HRA constitutes 40 to 50% of the basic salary.
  • Special Allowances:Makes up for the remainder part of the salary, mostly smaller than the basic salary and completely taxable.
  • Leave Travel Allowance: The non- taxable amount paid by the employer to the employee for vacation/trips with family within India.
  • Gratuity: It is basically a lump sum amount paid by the employer when the employee resigns from the organization or retires.
  • PF:Fund collected during emergency or old age. 12% of the basic salary is automatically deducted and goes to the employee provident fund.
  • Medical Allowance: The employer pays the employee for the medical expenditures incurred. It is tax free up to Rs.15,000.
  • Bonus:Taxable part of the CTC,usually a once a year lump sum amount, given to the employee based on the individual’s as well as the organizational performance for the year.
  • Employee Stock Options: ESOPS are Free/discounted shares given by the company to the employees. Done to primarily increase employee retention.


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