Hi,

There is no law to fix the Basic to a percentage of CTC.  The normal industry practice is to have it between 40% to 80% of CTC as basic and the balance as DA, conveyance etc.,  But as far as PF authorities are concerned, they look into the Gross salary and if they feel that the contribution is not matching for that gross salary, then they will go in depth to find out what is the basic salary shown.  Then they will insist that the basic should be between 50 to 60% of the gross.  As per the supreme court ruling, even the salary shown as special allowance and food allowance will also attract PF as recently I had a discussion with Regional PF Commissioner.  If it is not corrected, then the company is liable for assessment of PF including the special allowance and food allowance and the amount payable will be huge.  If the Organisation sticks to the ceiling of Rs. 6500/- for all including top management and pays 780/- as PF, then even if somebody shows the breakup as special allowance or food allowance does not matter.  What PF authorities wants is a minimum of Rs. 780/- for staff and other higher income people.

-Srinaren

hi guys!!!

dat was quite informative....

3 cheers   enjoy     :))

Hi.

the basic pay should be 35 - 45 % of ctc

and then other allowances.

the main reason why companies keep basic pay as low as possible, because all statutory benefits are calculated on basic and company dose not want to pay more.

For PF, there is one more fact that for members earning Basic salary more than or equal to 6500, it is optional to give PF, So this though that more basic more liability on company is false for highly paid employees, instead all companies try to make the basic as 6500 minimum, so that he/she go in optional bracket. The law says -Employees & employer has to make a matching contribution of 12 % each of the wages i.e. (Basic & DA) drawn by the employees to the extent of statutory limit of Rs 6500/-. If the employee desires to contribute more than his percentage of share, he may contribute more and for such contribution the employer will not make any matching contribution. This extra contribution is termed as VPF (which will be a fixed percentage to be decided once in a year) i.e. in April every year and no changes shall be made in currency of contribution period. (April to March ).