A salary structure is a set of rules that turns a CTC into components. When the rules live in spreadsheets, every new offer letter becomes a negotiation with the formula. When they live in the payroll system, offers, revisions and payroll all agree.

Start from CTC, not from Basic

Decide the CTC first, then work down: employer contributions come out of CTC, what remains is the gross, and the gross is split into components.

Set Basic by grade

Basic drives PF, gratuity and often HRA, so it deserves the most thought. A common pattern is a lower Basic percentage for junior grades and a higher one for senior grades. Set it per grade so it is never typed by hand.

Let Special Allowance balance the sheet

Fix HRA, LTA and the other components first, then let Special Allowance absorb the difference. That way the gross always matches.

Watch the circular parts

Employer ESI depends on gross, and gross depends on what is left after employer contributions. Systems solve this by iterating; spreadsheets usually get it slightly wrong.

Checklist

  • Every grade has a Basic percentage.
  • HRA rules for metro and non-metro locations are clear.
  • Components the company does not offer are switched off, not set to zero.
  • The simulator matches a payslip you trust.