Dear All,

Kindly help solve following queries,

If the CTC is Rs.10,000 can we keep basic as Rs 500/-

is their a criteria or ratio as to what should be the % of basic in the CTC

Regards

Priya

i would agree on the concept of basic being governed majorly by min. wages.

At higher levels, however this is about the phillosophy of how does company want to project itself, if they want to secure future of the employees then basic should be high so that retiral contribution is high and vice versa otherwise.

regards

Anubhav

Dear Friend,

Break up for Gross is provided just to avoid IT to the employees.  If break-up is not provided the entire Grosss Salary will be treated as Basic + DA which is fully taxable.

Basic +DA             HRA   Conveyance Allowance   Medical  Allowance  Luch Allowance

Fully Taxable        Partly Taxable

Partly Taxable means some amount is exempted and remaining is taxable.

How to Fix the Break-up

Basic + DA is fixed as per payment of Minimum Wages Act.  Other Allownaces is fixed as per management option, bu the amount fixed should be nmore than  the available exemption limit as per the Income Tax Act, normally HRA fixed will be 30 to 40% of Gross salary, Conveyance allowance, Food allowance should be more than the exempted limets.

DA means Dearness Allowance, which be a certain percentage on Basic.  DA fixations i strictly followed only for Government  Employees and Banks.  This DA fixation is based on the fluctuation rates the ncessary commodities. 

But in private sector basic means Basic + DA which be as per payment of minimum wages Act.

Basic as a component of wages is arrived generally thru a relative merit of the job.  You can use any of the standard Job Analysis technique available.

DA - as the name suggests came into offset the price rise - it is supposed to be a scalable one.   moves up when the price index (calculated on the basis of basket of commodities price at a point at a selected place/shop/region), and moves down when the price index comes down.    Hisotry has not seen enough of coming down and has always gone up and at some point gets merged with the basic.

However, in IT and modern HRM connotation, Basic is always a percentage of total CTC (which is what is taken for the salary structure), varying from 25% to 50%.  

Nagasubramanian.S

Hi

Basic should be always more than mimimum wages of that state or 40% percent CTC .

for example. for CTC of 10000 you can keep 4000 as basic.

Regards

Nandy