*This is just for reference and is not an actual representation of how salaries are structured.

In the above example, your CTC is Rs.16667 p.m.

Under Salary, you have basic salary, which is the main component of your salary slip. The break-up of your entire CTC is based on your basic salary. Your basic is also taxable as per the Income Tax rule.

Certain parts of your salary are exempt from tax while some components are taxable, unless you submit bills and other proof.

The amount in hand may get reduced because of two reasons

1. Taxation (which is the extent to which your salary is reduced)
2. Deductions, which are made and kept aside for future savings or till such time that they are claimed as tax exempt or taxable.

Taxation Components

Under taxation components, you have Income Tax and Profession Tax. These are sure deductions.

Income Tax

Income Tax is set by the Government. It mainly deals with the investment that you make if you are drawing a higher salary.

For women, there is a tax exemption up to a salary of Rs.1,45,000. But those who earn above this bracket, are required to pay income tax. If you produce investment documents, then you get an exemption.

Profession Tax

Profession Tax is a rule imposed by the Maharashtra Government. This means that if you are a salaried employee, you are required to pay profession tax.

The slab of deduction goes as follows.

Gross Salary	Tax Payable
Upto Rs.2500	Not Taxable
Rs.2500 - Rs.3500	Rs.60
Rs.3500 - Rs.5000	Rs.120
Rs.5000 - Rs.10,000	Rs.175
Rs.10,000 and above	Rs.200

However, the slabs for deductions vary from state to state.

Deductions

Under deductions you have Transport Allowance, LTA, Provident Fund, Medical and HRA.

Transport Allowance

The company gives you transport allowance to meet the expenses that you incur to commute from home to your work place. An amount of up to Rs.800 per month is exempt from tax.

LTA (Leave Travel Allowance)

LTA is a concession that an employer may pay you as a reimbursement towards any travel expenses within India that you may incur while on leave. These travel expenses may be incurred by you and your family.

To claim LTA, you have to submit your travel tickets, hotel bills and food bills. You can reclaim the  amount that your bills work out to.

However, you can claim your LTA only twice in four years.

Provident Fund

When you get your salary in hand the amount towards PF for employer's contribution, as well the amount towards PF for employee contribution will be deducted.

Using the above example, it means 16667 - (827x2) = 15013.

You may feel that because of PF you are losing a lot from your salary. But don't worry, the PF  ultimately goes into your kitty. When you resign, you can claim your PF savings or transfer it to your new PF account with the new company.

See how safe is your Provident Fund is!

Medical

Medical is usually paid out with salary if you submit the bills; else this amount will also not be credited each month.

HRA (House Rent Allowance)

HRA is given to you as a compensation for any rent that you may be paying towards house accommodation; i.e.: only if you are actually paying rent. If you produce the bills you get an exempt up to 50%.

So, the next time you are made a job offer, do not turn it down on the basis of the "in-hand" aspect. You just might miss out on a good opportunity.

(With inputs from: Shreedar Koparkar, Accounts Manager and Vilas Deshmukh, Chartered Accountant)