Topic: Can you help me device a salary structure which is tax efficient?

I have recently taken employment in a IT company in Noida. The company is offering me a CTC of Rs 5.5 lakhs. The company as part of above CTC is offering various reimbursements and benefits from which I can select.

This message was edited 1 time. Last update was at 30/06/2009 09:35:02

For tax efficient pay package you need to structure your CTC into various components which can broadly be classified into following three sub heads:

i) Fully taxable components like basic salary, dearness allowance, bonus, incentive etc.

ii) Fully or partly exempt components like house rent allowance(HRA), Transport Allowance, Leave travel allowance(LTA), Meal Vouchers/Pass etc.

iii) Reimbursements: Certain portion of the CTC is directed towards reimbursements on which employer pays FBT, which is generally recovered from employee as a part of CTC, the reimbursements on which employer pay FBT shall be exempt in employee's hands.

Now to structure your CTC you need to check the breakup offered to you, ensure that you select maximum components offered in category (ii) and (iii) above. However certain fixed portion shall always be directed towards (i) above.

Further you must also remember that your employer shall exempt reimbursements offered to you only if you produce bills for respective reimbursement.

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