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Can any one tell me, Paying HRA is mandatory under any Act? What should be the basic components of Salary? Only those components which are mandatory
Hi Varsha !
The salary structure for any organisation is an subjective issue, unless it relates to particular statute or labour. Accordingly, PF/ESI/Labour Welfare Fund are mandatory salary components. Rest depends with the locale of organisation and its nature e.g. Safety allowance may become mandatory if the premises or nature of job is hazardous etc.
Usually the salary structure is created from two sources-tax provisions and traditional structures. As both got HRA in it, thus it is continuing.
Though no particular statute (as far as I know)mentions its inclusion still it is desirable to have one as it helps in reducing the tax liability of an employee.
So for the basic components of salary, one could take:
1.Basic
2.HRA
3.PF
4.ESI (unless salary is above the statutory limit)
5.Gratuity (if you like to have one)
6. Special Allowance (For parking taxable allowance)
Rest componenets can be taken as per organisation/employees requirement from Income tax act as it

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