CTC Anatomy: All 30 Components Explained

Basic salary is the number the rest of the package is built on. HRA, PF, gratuity, and ESOP values are worked out as a percentage of basic. A higher basic raises those retirement benefits. It also raises the part of your pay that is taxed in full.

Dearness allowance is taxed in full. It counts toward gratuity and leave encashment only when your employment terms say so. If they do not, it is another taxable allowance.

From FY 2018-19, the ₹15,000 medical reimbursement was folded into the standard deduction. A medical allowance paid to you as cash is taxed in full.

Special allowance is whatever is left after the named components are filled in. It is taxed in full. Neither regime gives it an exemption.

Fuel the employer pays for is a perquisite. The value is added to your income. Neither regime exempts it.

A driver the employer pays for is a perquisite. The value is added to your income even when the driver is for office work, unless the car is yours and you keep a logbook (component 16).

An employer-owned car is taxed at a fixed monthly amount, not at what you actually use. Engine capacity up to 1.6 litre: ₹1,800 a month. Above 1.6 litre: ₹2,400 a month. A driver adds ₹900 a month.

A house the employer gives you is a perquisite. The taxable value is a percentage of salary: 15% where city population is above 25 lakh, 10% from 2.5 lakh to 25 lakh, and 7.5% in a smaller town. Rent-free housing and a house at a reduced rent both count. Salary for this percentage is basic, plus dearness allowance, plus every perquisite except LTA.

If the employer lends to you below the SBI rate, the interest you did not pay is a perquisite: (SBI rate − the rate you pay) × the maximum outstanding balance. A ₹1L education loan at 2% is included. A housing loan below the SBI rate is included too.

A performance bonus is taxed when it becomes due or when you receive it, whichever is earlier. A bonus declared in March and paid in April is taxed in the year it was declared.

A gym, club, or golf membership is taxed, unless the facility is on the employer's premises and every employee can use it the same way. A membership only some employees get is a perquisite.

House rent allowance is exempt under Section 10(13A) and Rule 2A, and only in the old regime. The exempt amount is the lowest of three figures: the HRA you receive, rent paid minus 10% of basic, and 50% of basic in a metro or 40% elsewhere. The four Rule 2A metros are Mumbai, Kolkata, Delhi, and Chennai. The worked rule is on the HRA page. The department's write-up is on the employee-benefits page.

A general conveyance allowance of ₹19,200 a year is exempt in the old regime. In the new regime that exemption is disallowed, so the whole amount is taxed.

₹100 a month per child, for up to two children, is exempt in the old regime. In the new regime the allowance is taxed.

Leave travel allowance is exempt in the old regime for travel inside India. In the block year 2026-29 you can claim two journeys. The journey has to be by air in economy, by rail, or by road. Foreign travel is not covered. In the new regime LTA is taxed.

What you actually spend on books and periodicals is exempt in the old regime. For most employees that is about ₹5,000 to ₹10,000 a year. In the new regime the allowance is taxed.

What you actually spend on a prescribed uniform is exempt in the old regime. That comes up in jobs that require one, such as manufacturing, healthcare, or aviation. In the new regime the amount is taxed.

What you actually spend on telephone and internet is exempt in the old regime. A bill the employer pays straight to the provider qualifies as well, so you do not have to route it as a reimbursement. In the new regime the table treats this component as taxable.

₹50 per meal is exempt in the old regime. The coupon has to be non-transferable. Prepaid meal cards that have replaced paper coupons may not get the same exemption. In the new regime the value is taxed.

Voluntary provident fund is what you contribute above the 12% employees' provident fund. In the old regime it sits inside the Section 80C deduction, and inside the ₹1.5 lakh cap. In the new regime Section 80C does not apply, so this extra contribution has no deduction.

If the car is yours, you use it for work, and you keep a daily logbook, the employer's reimbursement is exempt in both regimes. Without the logbook, the exemption does not apply.

Gratuity is exempt up to ₹20L under Section 10(10), in both regimes. The payout is 15/26 × last drawn salary × years of service. The employer's annual provision is 4.81% of basic. That provision is part of CTC. It does not come out of your monthly take-home until you leave. The same formula is on the gratuity calculator.

The employer's EPF contribution is exempt up to 12% of basic, in both regimes. If employer EPF, employer NPS, and superannuation together go over ₹7.5L in a year, the excess is taxed. That cap is the next section. It is the one people on a higher CTC run into.

An employer contribution to a superannuation fund is exempt up to ₹1.5L a year, in both regimes. It is one of the three amounts inside the ₹7.5L aggregate, with employer EPF and employer NPS.

Employer NPS is Section 80CCD(2). In the new regime the exempt contribution is 14% of basic, for a private employer and for the central government. In the old regime it is 14% for the central government and 10% for a private employer. The same contribution still counts toward the ₹7.5L aggregate. The rates are on the corporate NPS page.

A health-insurance premium the employer pays directly to the insurer is exempt in both regimes. It is not taxed as a perquisite. The cover is you, your spouse, and dependents.

Rule 3(2): ₹1,800 a month when the engine is 1.6 litre or below, ₹2,400 a month above that, plus ₹900 a month if a driver is provided. With a driver that is ₹2,700 and ₹3,300.

Employer-provided housing. The percentage applies to salary: basic, plus dearness allowance, plus every perquisite except LTA.

If the employer lends below the SBI lending rate, the interest you save is the perquisite. The formula:

A ₹1L education loan at 2% is a perquisite on the difference between the SBI rate and 2%. A housing loan below the SBI rate counts as well.

At exercise the perquisite is fair market value minus the price you pay. That amount is taxed as salary. Capital gains are a separate tax when you sell. In the example, FMV means fair market value.

For a DPIIT-eligible startup, perquisite tax on the ESOP is deferred. You pay at the earliest of a sale of the shares, the day you leave, or the end of the deferral. The component list uses 60 months after the financial year of exercise. The table in the next section uses 48 months from the end of that financial year. The ESOP deferral page says which allotment uses which window. If you have held the shares for more than 24 months after listing, the capital gain is taxed at 12.5% without indexation.

A cash gift from the employer is taxed in full. Gifts in kind are exempt up to ₹5,000 in total for the year. Above ₹5,000, the excess is a perquisite. A Diwali hamper in kind stays exempt if the year's gifts in kind stay within ₹5,000.