How to remove Circular reference (Need better formula)

Arvind Kaushik 

I would not enable Iterative Calculation.  As you said, you only need a better forumla.

According to your description, under the conditions that cause the circular calculation:

PF = (Basic + Comp)*12%

PF = (Basic + CTC - Basic - HRA - Convey - Bonus - Super - PF)*12%

PF = (CTC - HRA - Convey - Bonus - Super)*12% - PF*12%

PF*(1+12%) = (CTC - HRA - Convey - Bonus - Super)*12%

PF = (CTC - HRA - Convey - Bonus - Super)*12% / (1+12%)

So the formula in C9 should be:

=ROUND(IF(C3<15000, MIN(1800, (C10-C4-C5-C7-C8)*12% / (1+12%)), C3*12%), 0)

Caveat: Since you did not provide the formulas in a form that I can copy-and-paste, beware of typos.

-----
Because C10 and C5 are constants, it is prudent to enter the following into C9 (PF):

=ROUND(IF(C3<15000, MIN(1800, MAX(0, (C10-C4-C5-C7-C8)*12% / (1+12%))), C3*12%), 0)

Otherwise, C9 would be negative for C5 (Conveyance)>C10*67.5%, perhaps plus a little more due to rounding.

Similarly, it is prudent to enter the following into C6 (Compensatory):

=MAX(0, C10-SUM(C3:C5,C7:C9))

Otherwise, for C10>30000, C6 would be negative for C5 (Conveyance)>C10*11.5%, perhaps plus a little more due to rounding.

Arvind Kaushik C6 refers to C9 and vice versa. That indeed causes a circular reference.

Start by explaining what value you would expect in C9, and why.