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Basic Pay
Human Resources » Compensation & Benefits

Chrm Message From: suraj2 Total Posts: 15 Join Date: 10/09/2009
Rank: Executive Post Date: 17/09/2009 10:12:38 Points: 75 Location: India

Dear All,

I have recently joined a company. Here what I found is that the Basic of all employee is very less, It's not even 10% of the CTC. Can any body help me out about the details how the pay structure should be. As per my knowledge the basic pay should be 50% of the CTC. Is this correct? Can anybody provide me the link or book name which provides me the legal aspect of Basic Pay.

Thanks in advance


Chrm Message From: quasar Total Posts: 18 Join Date: 10/09/2009  
Rank: Executive Post Date: 17/09/2009 10:14:03 Points: 90 Location: India


Most of the companies follow the practice of keeping the basic pay less to avoid the high PF contribution (Employer) which gets into the CTC. Simultaneously you can see that most of the pay is allocated into special allowance which is taxable at the hand of employee. Generally a good ratio is 50% Basic and 40% HRA and rest you can allocate to certain other components like medical, transport etc.

I have not seen any law which says strictly that basic has to be a certain percentage. It is more dependent on the company to take a call on the fixation.

Chrm Message From: pOOrnima Total Posts: 25 Join Date: 10/09/2009  
Rank: Executive Post Date: 17/09/2009 10:15:43 Points: 125 Location: India

Two Rules govern the structure :-

1) Income Tax Rules and regulations
2) Provident fund Act
3) ESIC rules , It should be 50% of gross salary and not the CTC .gross salary is part of CTC .


Chrm Message From: t_sampath Total Posts: 23 Join Date: 10/09/2009  
Rank: Executive Post Date: 18/09/2009 12:49:06 Points: 115 Location: India

CTC of an employee has to be worked as under:

Rs.800 as conveyance allowance ( employee get tax benefit)
Rs.1250 as Medical Reimbursement (employee get tax benefit)
Remaining part CTC has to be distributed as under:
60% Basic
50% Basic as HRA
12% of PF - Employer contribution
4.75% of ESI - Employer contribution.

Hope this will give some idea to you.

Chrm Message From: Total Posts: 1 Join Date: 10/09/2009  
Rank: Beginner Post Date: 02/11/2009 18:35:41 Points: 5 Location: India

can u please help me with preparing a salary structure at mangerial level as its my assignment topic the total pay should be in range of 50,000-60,000 monthly.


 with regards,

rashmi hakimpalli



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