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👥 Payroll & Labourvia Income Tax e-Filing Portal (incometax.gov.in)

Salary Restructuring & CTC Optimisation Advisory

Expert advisory on optimising CTC structures through tax-efficient allowances, deductions, and perquisite valuation under Indian tax laws.

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STARTING FROM₹9,999
TYPICAL TIMELINE5 days
DOCS REQUIRED2 documents
APPLICABLE TOIndividual, Company, LLP

Regulatory Framework

SALARY RESTRUCTURING — REGULATORY BASIS

HRA: Section 10(13A) read with Rule 2A — exempt as minimum of actual HRA received, 50% of salary (metros)/40% (non-metros), or rent paid minus 10% of salary.

LTA: Section 10(5) — two domestic journeys in a four-year block; actual travel cost exempt.

Standard Deduction: Section 16(ia) — ₹50,000 flat deduction (Finance Act 2018); available under both regimes.

Children Education Allowance: Section 10(14) read with Rule 2BB — ₹100/child/month (max 2 children); Hostel Allowance ₹300/child/month.

NPS Employer Contribution: Section 80CCD(2) — most potent lever: up to 10% of basic+DA for private sector (14% for central govt per Finance Act 2024); no monetary cap; available under both Old and New Regimes under Section 115BAC.

Perquisites: Rule 3 of Income Tax Rules, 1962 — company car, accommodation, ESOP perquisite valuation. Rule 3(7)(ix) — telephone reimbursement exempt for actual expense.

New vs Old Regime (Section 115BAC): HRA, LTA, Chapter VI-A deductions (80C, 80D) not available under new regime. NPS employer contribution under 80CCD(2) remains available under both regimes.

Gratuity: Section 10(10) — exempt up to ₹20 lakh (Payment of Gratuity Amendment Act 2018).

Food Coupons/FBP: CBDT clarification — up to ₹50 per meal per working day exempt.

Overview

Our Salary Restructuring & CTC Optimisation Advisory provides a comprehensive analysis and redesign of employee compensation structures to maximise tax efficiency for both employers and employees. We leverage HRA under Section 10(13A), LTA under Section 10(5), the standard deduction under Section 16(ia), NPS employer contribution under Section 80CCD(2), and perquisite valuation per Rule 3. We model the impact under both Old and New Tax Regimes under Section 115BAC.

How It Works

  1. 1

    Initial Consultation & Document Collection

    Collect salary slip, investment proofs, employment contract, and company policies. Understand current CTC structure and financial goals.

    Government1 day
  2. 2

    Current CTC & Tax Liability Analysis

    Map every CTC component to its tax treatment. Compute current tax liability under both Old and New Regimes to establish baseline.

    Government1 day
  3. 3

    Restructuring Proposal & Modelling

    Develop restructuring models optimising for HRA, LTA, CEA, NPS 80CCD(2), standard deduction, and perquisite valuation. Show projected tax savings and take-home under both regimes.

    Government1 day
  4. 4

    Implementation Roadmap & Policy Drafting

    Provide clear implementation roadmap for employer including HR policy amendments for FBPs, allowances, and NPS contribution mechanism.

    Government1 day
  5. 5

    Post-Implementation Support

    Support for first payroll cycle under new structure to ensure correct TDS. Assist with any ITR filing queries.

    Government1 day

Frequently Asked Questions

What is the primary benefit of salary restructuring?
Legal reduction of income tax liability by restructuring CTC into tax-exempt allowances and deductions — HRA (Section 10(13A)), LTA (Section 10(5)), and NPS employer contribution (Section 80CCD(2)) — increasing net take-home pay without additional employer cost.
How does the NPS employer contribution under Section 80CCD(2) work?
Employer contributions to an employee's NPS account are deductible from total income. For private sector: up to 10% of basic+DA; for central government employees: up to 14% (Finance Act 2024). No monetary cap. Available under both Old and New Tax Regimes under Section 115BAC — making it the most effective restructuring lever currently available.
Is HRA exemption available under the New Tax Regime?
No. Section 10(13A) HRA exemption is not available under the New Tax Regime (Section 115BAC). It is only available under the Old Regime. Our advisory models both regimes to help you choose the optimal option.
What is the standard deduction and who is eligible?
All salaried individuals can claim a flat ₹50,000 deduction under Section 16(ia) (Finance Act 2018), available under both Old and New Tax Regimes. It replaced the earlier transport allowance and medical reimbursement exemptions.
How are perquisites like a company car valued?
Perquisites are valued under Rule 3 of the Income Tax Rules, 1962. Company car value depends on engine capacity and whether used for personal/official purposes. Accommodation value is a percentage of salary depending on ownership status. Incorrect valuation leads to tax and penalty exposure.
What are Flexi-Benefit Plans (FBP)?
FBPs convert taxable salary into exempt allowances — food coupons up to ₹50/meal/working day (CBDT clarification), telephone reimbursement for actual expenses under Rule 3(7)(ix). Properly designed FBPs are audit-ready and maximise exempt income.
What is the current limit for tax-free gratuity?
Under Section 10(10) of the Income Tax Act, gratuity is exempt up to ₹20 lakh (Payment of Gratuity Amendment Act 2018). Any amount above ₹20 lakh is taxable as salary income.

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