Hello all,
Is there any provision that the basic/basic+da should be 50% of the gross salary? What should be the percentage of basic in a gross salary and in which act is it mentioned? Kindly clarify.
Parag
From India, Nasik
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3Is there any provision that the basic/basic+da should be 50% of the gross salary? What should be the percentage of basic in a gross salary and in which act is it mentioned? Kindly clarify.
Parag
From India, Nasik
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hello prag, basic percentage is 40 to 60% of the ctc or gross salary. BASIC- 60% HRA- 30% CONV- 10% GROSS SALARY - 100% IT’S ENOUGH FOR YOUR QUERY.
From India, Delhi
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From India, Delhi
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Dear Mukesh,
Thank you for your reply. Do you have any circular from the government or something similar? I mean, is what you stated being followed by you/your company mentioned in any statute?
I wanted to know where it is referenced in the statute.
Parag
From India, Nasik
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Thank you for your reply. Do you have any circular from the government or something similar? I mean, is what you stated being followed by you/your company mentioned in any statute?
I wanted to know where it is referenced in the statute.
Parag
From India, Nasik
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There is no rule or clause in any Act that the basic must be 50% or 60% of the gross salary. This demand has recently been made by PF authorities, and there is also a circular issued by PF authorities to their officers, which is being circulated to various companies as well.
I happened to attend a workshop convened by EFSI where one of the speakers was the PF commissioner himself. When one of the participants raised the same question, he clearly stated that THERE IS NO SUCH RULE.
It is simply because if the basic component in the salary breakdown is higher, the employee would receive more benefits in terms of pension, PF contribution (by the employer), etc. After all, at the time of retirement, the employee needs money to support his family, isn't it? Without this rationale, there is no rule written anywhere in the Act, and that is the message the PF commissioner conveyed during the workshop.
Now, many organizations are under pressure from PF authorities (via the internal circular they have issued) that the Basic (and DA) should not be less than the minimum wages prescribed by the government. This is a matter that needs further discussion.
Balaji
From India, Madras
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I happened to attend a workshop convened by EFSI where one of the speakers was the PF commissioner himself. When one of the participants raised the same question, he clearly stated that THERE IS NO SUCH RULE.
It is simply because if the basic component in the salary breakdown is higher, the employee would receive more benefits in terms of pension, PF contribution (by the employer), etc. After all, at the time of retirement, the employee needs money to support his family, isn't it? Without this rationale, there is no rule written anywhere in the Act, and that is the message the PF commissioner conveyed during the workshop.
Now, many organizations are under pressure from PF authorities (via the internal circular they have issued) that the Basic (and DA) should not be less than the minimum wages prescribed by the government. This is a matter that needs further discussion.
Balaji
From India, Madras
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Dear Parag,
It will help you:
(1) Basic: 35-40% of gross salary
HRA - 40% of Basic
Transport Allowance: Rs. 800 (Fixed) - tax limits
Medical: Rs. 1250 (Fixed) - tax limits - (yearly 15000/-)
Adhoc allowance - Balancing amount
Total of (1) constitutes - Gross Fixed
(2) Gross benefits like - PF - 12% of Basic & DA
Gratuity: 4.83% of basic & DA
ESIC - 4.75% of GPA - (Less than 15000/- GPM)
Food Coupon
Mediclaim Insurance/Life
LTA
Bonus
Total of (2) constitutes - Gross Benefits
Sum total of (1) & (2) constitutes CTC.
Regards,
Sanjeev Patil
From India, Mumbai
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It will help you:
(1) Basic: 35-40% of gross salary
HRA - 40% of Basic
Transport Allowance: Rs. 800 (Fixed) - tax limits
Medical: Rs. 1250 (Fixed) - tax limits - (yearly 15000/-)
Adhoc allowance - Balancing amount
Total of (1) constitutes - Gross Fixed
(2) Gross benefits like - PF - 12% of Basic & DA
Gratuity: 4.83% of basic & DA
ESIC - 4.75% of GPA - (Less than 15000/- GPM)
Food Coupon
Mediclaim Insurance/Life
LTA
Bonus
Total of (2) constitutes - Gross Benefits
Sum total of (1) & (2) constitutes CTC.
Regards,
Sanjeev Patil
From India, Mumbai
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Dear Prag,
The Income Tax Act contains provisions regarding HRA. Please consult a Chartered Accountant for more information. In metropolitan cities, it is typically 50% of the Basic salary, while in non-metropolitan cities, it is usually 40% of the Basic salary.
RL Dhingra
Advocate & Labour Law Consultant
Email: rld_498@rediffmail.com
09818309937
From India, Delhi
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The Income Tax Act contains provisions regarding HRA. Please consult a Chartered Accountant for more information. In metropolitan cities, it is typically 50% of the Basic salary, while in non-metropolitan cities, it is usually 40% of the Basic salary.
RL Dhingra
Advocate & Labour Law Consultant
Email: rld_498@rediffmail.com
09818309937
From India, Delhi
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Before fixing the basics, just find the minimum salary for that post as per the labor office government notification. As per government rules, for each work, there is a minimum basic salary. We have to keep that basic and with that basic, calculate the HRA and other allowances. It will be good if we keep 60% as the basic.
Regards,
Ajesh B.
HR Admin Executive in an MNC
From India, Kochi
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Regards,
Ajesh B.
HR Admin Executive in an MNC
From India, Kochi
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According to the Minimum Wages Act, the Basic should be 35 to 50% of the Gross salary. The range depends on the C&B policies of the companies. Some companies believe in variable components, while others believe in providing a good basic within the aforementioned range. This not only ensures good post-retirement benefits but also represents a fixed liability of the company.
Shneha D Thakur
From India, Delhi
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Shneha D Thakur
From India, Delhi
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Hi there,
Recently, the Karnataka High Court issued a judgment regarding the splitting of minimum wages for the purpose of PF contribution. The Honorable Court held that splitting of minimum wages cannot be done, and PF contribution should be paid for the entire amount, i.e., for the total wage.
I don't think there is any hard and fast rule followed to fix the basic wages. It all depends on management.
From India, Madras
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Recently, the Karnataka High Court issued a judgment regarding the splitting of minimum wages for the purpose of PF contribution. The Honorable Court held that splitting of minimum wages cannot be done, and PF contribution should be paid for the entire amount, i.e., for the total wage.
I don't think there is any hard and fast rule followed to fix the basic wages. It all depends on management.
From India, Madras
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Basic Pay is the fixed monthly salary component received by employees. It can be a fixed percentage of CTC based on employee grades like:
Grade 1: 15-25% of Fixed Pay
Grade 2: 20-30% of Fixed Pay
Grade 3: 25-35% of Fixed Pay
Grade 4: 30-40% of Fixed Pay, etc.
However, there is no hard and fast rule for it. It depends on the company to company and their salary structure.
PayrollSolutions
Software & IT Solutions Company
From India, Delhi
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Grade 1: 15-25% of Fixed Pay
Grade 2: 20-30% of Fixed Pay
Grade 3: 25-35% of Fixed Pay
Grade 4: 30-40% of Fixed Pay, etc.
However, there is no hard and fast rule for it. It depends on the company to company and their salary structure.
PayrollSolutions
Software & IT Solutions Company
From India, Delhi
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