Page 19 - IRCTC_NOV
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  Understanding Salary Structure & Tips to Save Income Tax
Rahul Gupta, AGM (Finance)/CO
  1. Basic Salary - Basic salary is the base income of an individual. Basic salary is the amount paid to employees before any reductions or increases due to overtime or bonus, allowances. It is generally anywhere between 40% and 50% of your Cost to Company (CTC). Basic pay is taxable.
2. Dearness Allowance – Dearness Allowance is paid by the government to its employees to offset the impact of inflation. The effective salary of government employees requires constant enhancement to help them cope up with the increasing prices. DA is fully taxable for salaried employees.
3. House Rent Allowance - House Rent Allowance or HRA is a salary component paid to employees by an employer towards the accommodation cost of living in that city. Even though it is a part of your salary, unlike basic pay, HRA isn’t entirely taxable, subject to conditions (a percentage of HRA is exempted under Section 10 (13A) of the IT Act, 1961).
Leased Accommodation: Employee from E0 & Above may opt facility of lease accommodation in place of HRA and rent for such accommodation are being paid by employer.

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