CTC Anatomy — All 30 Components Explained.

The anchor of your CTC. Everything else — HRA, PF, gratuity, ESOP — is calculated as a percentage of Basic. Higher Basic = higher retirement benefits but also higher taxable income.

Only counts toward retirement benefits (gratuity, leave encashment) if your employment terms specifically state so. Otherwise it's just another taxable allowance.

Post FY 2018-19, the ₹15,000 medical reimbursement was subsumed into the Standard Deduction. Any medical allowance paid as cash is fully taxable.

The "residual" bucket. Employers dump unallocated components here. Fully taxable with zero exemptions — the most tax-inefficient component in your CTC.

Taxable perquisite. The employer pays for your fuel, and the value is added to your perquisite income. No exemption available.

Taxable perquisite. Even if you need a driver for official work, the value is added to your income unless the car is employee-owned with a logbook.

Fixed perquisite values: cars up to ₹1.6L engine capacity → ₹1,800/mo; above ₹1.6L → ₹2,400/mo. Driver adds ₹900/mo. Non-negotiable — you can't claim lower actual use.

Employer-provided housing is a perquisite taxed at a percentage of salary: 15% for cities with population >25L, 10% for 2.5L-25L, 7.5% for smaller towns. Rent-free or concessional both count.

If your employer gives you a loan below SBI rate, the interest saved is a perquisite: (SBI rate − actual rate) × max outstanding balance. Even a ₹1L education loan at 2% counts.

Taxed on due or receipt basis, whichever is earlier. If your bonus is declared in March but paid in April, it's still taxable in the year of declaration.

Gym, club, golf — all taxable unless used uniformly on employer premises and available to all employees. Exclusive memberships are a perquisite.

House Rent Allowance — exempt under Section 10(13A) for actual rent paid. Minimum of: actual HRA, rent minus 10% of Basic, or 50%/40% of Basic (metro/non-metro). 8 cities now qualify as metros (Bengaluru, Pune, Hyderabad, Ahmedabad added).

General conveyance allowance of ₹19,200/year was exempt under Old Regime. In New Regime, this exemption is disallowed — the entire amount is taxable.

₹100/month per child (max 2 children) was exempt. Small amount but relevant for employees with school-going kids.

Leave Travel Allowance — exempt for domestic travel. Block year 2026-29: 2 journeys per block. Must travel by air (economy), rail, or road. Foreign travel not covered.

Actual expenditure on books and periodicals was exempt. Typically small — ₹5,000-10,000/yr for most employees.

Actual uniform expense was exempt. Relevant for employees with prescribed uniforms (manufacturing, healthcare, aviation).

Actual expenditure on telephone and internet was exempt. Direct employer payment to the service provider also qualifies — no reimbursement needed.

₹50 per meal was exempt under Old Regime. Must be non-transferable. Now largely replaced by prepaid card systems which may not qualify for the same exemption.

Voluntary Provident Fund — employee contribution above 12% EPF. Gets 80C deduction (within ₹1.5L cap) under Old Regime. In New Regime, 80C is gone — VPF contributions have no tax benefit.

If you own the car and use it for business with a logbook, the employer's reimbursement is exempt. The logbook is non-negotiable — maintain it daily. Most generous exemption in CTC.

Exempt up to ₹20L under Section 10(10). Formula: 15/26 × last drawn salary × years of service. Employer contribution (4.81% of Basic) is part of CTC but doesn't reduce take-home until you leave.

Employer's EPF contribution up to 12% of Basic is exempt. But watch out — if Employer EPF + NPS + Superannuation exceeds ₹7.5L/year, the excess is taxable. High-earning employees hit this cap.

Exempt up to ₹1.5L/year. Employer contribution to superannuation fund. Subject to the ₹7.5L aggregate cap along with EPF and NPS.

Employer contribution to NPS under Section 80CCD(2). New Regime: 14% of Basic (private + central govt). Old Regime: 14% for central govt, 10% for private. Exempt up to 14% — best retirement benefit in New Regime.

Employer-paid health insurance premium is exempt if paid directly to the insurer. Not a perquisite — it's a welfare benefit. Covers you, spouse, and dependents.

[TO VERIFY] Draft Income Tax Rules 2026 propose increasing car perquisite values to ₹5,000/₹7,000/mo. Final notification pending CBDT confirmation.

Employer-provided housing. Tax as % of "salary" (Basic + DA + all perks except LTA):

If employer gives loan below SBI lending rate, interest saved = perquisite. Formula:

Even ₹1L education loan at 2% interest = perquisite on the difference. Housing loans below SBI rate also count.

Perquisite at exercise: FMV at exercise − exercise price. This is income tax, not capital gains. Capital gains apply separately when you sell.

For DPIIT-eligible startups: tax is deferred. You pay income tax at the earliest of: sale of shares, cessation of employment, or 48 months from end of FY of exercise. Capital gains: if held >24 months post-listing, taxed at 12.5% without indexation.

Cash gifts are fully taxable. In-kind gifts: aggregate value up to ₹5,000/year is exempt. Anything above is a perquisite. Festival gifts in kind (Diwali hampers) within ₹5K are fine.