The first salary you receive is a milestone and a reason for great pride. While you are overjoyed in the beginning, they might get confused later when they look at the terms and amounts on their salary slip. Here are some basics of salary structure in India, decoded.

• Basic Salary: This amount is fixed and depends on the designation. In the salary breakup, it is 35-50% of total salary. This is the amount without reductions, bonus, allowances, etc. and is taxable under the Income Tax Act.
• Allowances: There are several allowances. Here are some examples:
• EPF: Employee Provident Fund, a crucial part of the salary structure in India, is a fund maintained by the Employees Provident Fund Organisation (EPFO) to act as a source of savings for the employee. Each month, a minimum of 12% of salary is deducted and added to the fund. This includes contributions from both the employee and employer.
• Professional Tax: This amount is paid to the respective state government towards Employment Guarantee Fund and Employment Guarantee Scheme. Though mandatory in the salary structure in India, the rate differs from state to state and maximum contribution in a year is ₹2,500.
• Suggested Read: Professional Tax (P Tax) - Tax Rates, Applicability & Exemptions
• Perks: Perquisites are benefits like car, rent-free house, etc. provided to employees at a certain position, over and above salary. This amount is added to the salary breakup for tax calculation.
• ESI: Under the Employees’ State Insurance Corporation, ESI is social security provided to employees for times of financial strain. It has to be given by companies with 10 employees or more (20 or more in Maharashtra & Chandigarh) who earn a gross salary of less than ₹21,000 per month.
• Gratuity: This term is often heard when someone who's been with the organisation for very long is leaving. Gratuity is the part of salary breakup that they receive as gratitude from the company for their services. It is available to employees who have stuck around for at least 5 years, though it is deducted even if one leaves earlier. It is 4.81% of the basic salary.

When one receives the first salary, they must have a look at these amounts to understand how to save money and save taxes better.