This is the foundational component of your salary. Any other allowances and bonuses are offered in addition to this component. Basic salary can account for 35% to 50% of your monthly income.
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Allowances are monetary benefits that are paid out to employees over their basic salary. If you take a look at your pay slip, you’ll find various kinds of allowances. Check some common allowances out here!
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To help employees combat inflation, employers offer a financial benefit known as the Dearness Allowance.This allowance is computed as a percentage of the basic salary.
Dearness Allowance (DA)
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To compensate employees for their rental expenses, many employers offer a financial benefit known as (HRA).
Unlike your basic pay and your DA, the HRA you receive may not be fully taxable.
House Rent Allowance (HRA)
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Some employers offer their employees an allowance that covers the cost of domestic travel of the employee on a holiday.
LTA can cover trips for the employee or their dependants.
Leave Travel Allowance (LTA)
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This is also known as transport allowance. Employers offer this to help employees meet the cost of commuting to and from the workplace.
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This allowance compensates employees for any medical costs they may incur during the year. It is fixed by the employer, and is not a variable component of your salary.
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Apart from these, there might be other allowances that your employer offers.
These can range from bonuses to upskilling allowances. Be sure to check your salary structure well to maximise on your allowances