Basic Pay

Human Resources » Compensation & Benefits

	Message From: suraj2	Total Posts: 8	Join Date: 10/09/2009
Rank: Beginner	Post Date: 17/09/2009 10:12:38	Points: 40	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

Suraj

	Message From: quasar	Total Posts: 15	Join Date: 10/09/2009
Rank: Executive	Post Date: 17/09/2009 10:14:03	Points: 75	Location: India

Suraj,

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.

	Message From: pOOrnima	Total Posts: 23	Join Date: 10/09/2009
Rank: Executive	Post Date: 17/09/2009 10:15:43	Points: 115	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 .

pOOrnima

	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

Hi

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.

Regards
Sampath
919710928705

	Message From: rashmih26@gmail.com	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

(rashmih26@gmail.com)

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