Hi, Please advise me on the below matter. Under the new wage code regime, can we fix 50% of the total salary as HRA and the other 50% as basic pay (Wage)?
From India, Bengaluru
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From India, Bengaluru
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No, the employer's portion of PF and the statutory bonus, when added back to HRA under the 50% condition, will not satisfy.
S K Bandyopadhyay (Howrah, WB)
From India, New Delhi
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409S K Bandyopadhyay (Howrah, WB)
From India, New Delhi
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Dear Sir,
Could you please specify the point? For example, an employee who is currently drawing a salary of a total of Rs. 30,000 (Basic Pay of Rs. 16,000 and other allowances of Rs. 14,000). After the revision, can we change it to Rs. 16,000 as basic pay and Rs. 14,000 as House Rent Allowance (HRA)?
From India, Bengaluru
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Could you please specify the point? For example, an employee who is currently drawing a salary of a total of Rs. 30,000 (Basic Pay of Rs. 16,000 and other allowances of Rs. 14,000). After the revision, can we change it to Rs. 16,000 as basic pay and Rs. 14,000 as House Rent Allowance (HRA)?
From India, Bengaluru
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Dear Asif,
On a basic salary of ₹16,000, if you take into account the Employer's portion of PF, Statutory Bonus, and any other annual components, then the 50:50 condition will not be met. In this scenario, a salary of ₹14,000 for HRA along with PF, Statutory Bonus, etc., will exceed the ₹16,000 basic salary.
Thank you.
From India, New Delhi
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On a basic salary of ₹16,000, if you take into account the Employer's portion of PF, Statutory Bonus, and any other annual components, then the 50:50 condition will not be met. In this scenario, a salary of ₹14,000 for HRA along with PF, Statutory Bonus, etc., will exceed the ₹16,000 basic salary.
Thank you.
From India, New Delhi
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The rule is that Basic + DA + Retaining Allowance should be at least 50% of total salary If you have no other allowance, then since Basic is more than 50% of total salary, it is correct.
From India, Mumbai
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From India, Mumbai
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The rule is wages (Basic + DA) should be 50% of the total wages calculated as per the definition of Wage under the wage code. This definition includes the Employer's portion of PF and Statutory Bonus as per (a) to (i) of the first proviso. Hope Statutory compliance is fulfilled properly. The 14,000/- HRA, after adding back Employer PF and Bonus, will be more than Basic (16,000/-) and the 50:50 condition will not be fulfilled. Hence, it is wrong.
From India, New Delhi
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From India, New Delhi
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Dear Seniors,
Greetings! I often go through your day-to-day posts. This helps me in streamlining my HR department. I would like to thank each and every one of you on this platform for giving guidance.
Due to the new wage code, I guess everyone has a query on calculating their CTC. For example, 3 Lac. I have tried to some extent. All seniors, if you can check and give your feedback, I shall be really obliged.
CTC Salary breakup 25,000 p.m.:
Basic (60% of gross) - 15,000
HRA (20% of basic) - 3,000
Conveyance - 800
LTA - 800
Medical allowance - 800
Mobile allowance & net - 500
Special allowance - 178
Employer PF - 1,800
Gratuity - 722
Ex-gratia / bonus - 750
Insurances - 650
Deductions from CTC: Employee share to PF, PT
Thank you
From India, Vijayawada
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Greetings! I often go through your day-to-day posts. This helps me in streamlining my HR department. I would like to thank each and every one of you on this platform for giving guidance.
Due to the new wage code, I guess everyone has a query on calculating their CTC. For example, 3 Lac. I have tried to some extent. All seniors, if you can check and give your feedback, I shall be really obliged.
CTC Salary breakup 25,000 p.m.:
Basic (60% of gross) - 15,000
HRA (20% of basic) - 3,000
Conveyance - 800
LTA - 800
Medical allowance - 800
Mobile allowance & net - 500
Special allowance - 178
Employer PF - 1,800
Gratuity - 722
Ex-gratia / bonus - 750
Insurances - 650
Deductions from CTC: Employee share to PF, PT
Thank you
From India, Vijayawada
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Dear Nanu,
I think you are focusing on CTC rather than Gross Salary in your work. The wage code mandates providing Basic Salary + DA + Retaining Allowance at 50% of Gross Salary. Employer contributions to PF, ESIC, Bonus, and Overtime are not considered part of Gross Salary. In this scenario, the Gross Salary comprises only Basic Salary and HRA. Therefore, the calculations you have provided are accurate.
From India, Mumbai
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I think you are focusing on CTC rather than Gross Salary in your work. The wage code mandates providing Basic Salary + DA + Retaining Allowance at 50% of Gross Salary. Employer contributions to PF, ESIC, Bonus, and Overtime are not considered part of Gross Salary. In this scenario, the Gross Salary comprises only Basic Salary and HRA. Therefore, the calculations you have provided are accurate.
From India, Mumbai
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Dear Saswata,
I am extremely sorry that I do not agree with your opinion. Instead, I suggest you read the definition of wage repeatedly to grasp the mathematical nuances in the definition. The definition comprises three main parts. The first part includes all remuneration payable to the employee, such as Basic, DA, and Retaining allowance. The second part consists of the exclusion list (a) to (k), and the third part is the first proviso, which explains how to verify the 50% condition of the exclusion part from (a) to (i). If the total exclusion under (a) to (i) exceeds 50% of the wage, the surplus amount will be added back to the wage. Therefore, the definition of wage does not instruct the calculation of 50% of the gross salary.
According to the definition, it encompasses all the remuneration computed under this definition that is payable to the employee, which essentially is the CTC excluding ESIC and any insurance premium, as these items are not payable to the employee. 50% of this sum constitutes the wages (Basic and DA).
I have previously made numerous posts elaborating on the same topic. If you disagree with my opinion, please consult experts in India on this matter—such as Tax Guru, Mercer, Deloitte, etc.
Thanks & Regards,
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions
From India, New Delhi
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I am extremely sorry that I do not agree with your opinion. Instead, I suggest you read the definition of wage repeatedly to grasp the mathematical nuances in the definition. The definition comprises three main parts. The first part includes all remuneration payable to the employee, such as Basic, DA, and Retaining allowance. The second part consists of the exclusion list (a) to (k), and the third part is the first proviso, which explains how to verify the 50% condition of the exclusion part from (a) to (i). If the total exclusion under (a) to (i) exceeds 50% of the wage, the surplus amount will be added back to the wage. Therefore, the definition of wage does not instruct the calculation of 50% of the gross salary.
According to the definition, it encompasses all the remuneration computed under this definition that is payable to the employee, which essentially is the CTC excluding ESIC and any insurance premium, as these items are not payable to the employee. 50% of this sum constitutes the wages (Basic and DA).
I have previously made numerous posts elaborating on the same topic. If you disagree with my opinion, please consult experts in India on this matter—such as Tax Guru, Mercer, Deloitte, etc.
Thanks & Regards,
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions
From India, New Delhi
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Minimum Wage of UP & UK.pdf