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vijayalakshmikv Started The Discussion:

How Basic salary is defined and how much part of CTC must be the Basic in salry, for example say if 20,000 is monthly salary then is there any defined percent for basic salary .........please somebody can explain?

sarithar - Member Since: Nov 2007
Hi Vijaylakshmi,

For Metro Cities the basic salary calculation is 50% and for Non Metro Cities it is 40%, For example
Your Gross Salary is 20,000 so basic calculation would be,
Metro Cities-20000/50%=10,000
Non Metro Cities-20000/40%=8000

Their are some companies who pay a Minimum or Fixed Basic Salary(4,000 or above 4,000) for people who would earn more to reduce their PF contribution towards the employee's pf account.

Hope this might be of any help to you.

Regards
Saritha

kraos_1954@yahoo.co.in - Member Since: Jun 2008
PF authorities are insisting for a minimum of 50% as basic ( if DA is also there then it should be Basic + DA )salary. If you make it like annuties like Medical re-imbursement / LTA etc then the basic will come down.
Thanks and regards - kamesh

pravinvadaliya - Member Since: Jun 2010
Quote:
Originally Posted by vijayalakshmikv View Post
How Basic salary is defined and how much part of CTC must be the Basic in salry, for example say if 20,000 is monthly salary then is there any defined percent for basic salary .........please somebody can explain?
What is CTC?
Dear all members,
Now a days most of companies offer their package in form of CTC (cost to company). Is there any guide line to compute CTC I mean which payments to an employee should include while computing CTC ? Here it is also informative to add that all companies calculate the same in their own way some of them even include all reumbersment like conveyance exp. etc. and a step more some includes FBT paid by the company on his expenses.
Now we if we take it from the employee's point of view at some place he gets cash in hand only 50-60% of monthly CTC what he was assured at the time of recruitment..Some time it gives a very bad impression to employee like a robbery over his salary.





What is CTC?


We cannot call it as robbery over his salary. It is what we are paying him indirectly.

To make it simple the monthly salary includes all his allowances along with basic and DA. This is used in calculating his gross salary for a year. Along with this there are other benefits such as LTA, Medical Domiciliary, Bonus etc which we include in his CTC thus making it a complete whole.

If an employee avails a LTA or avails reimbursement from his medical domiciliary we actually pay it. That is what we are projecting in the CTC.

So it would be better to explain this to a new commer if you think that you have to maintain a good impression.








What is CTC?


After a candidate qualifying all the interview formalities the HR can have a one-to-one meeting session to discuss in detail about the CTC.

The salary breakups can be properly given and take home salary can also be given to them. Indirect and direct emoluments can be discussed in detail.

In brief "SALARY OF AN UPCOMING EMPLOYEE SHOULD BE SHOWN IN BLACK AND WHITE."

This will fetch a good name to the organization and will help to maintain a wonderful employee relationship.




What is CTC?
Comments on this topic has already been posted in this forum earlier but to quickly recap, any amount that the company spends for the benefit of its employee can be calculated under Cost to Company. This will include medical insurance, accident policy, subsidised lunch / food, any attire / apparel / furnishing / shoe etc. provided (outside of office), PF, Gratuity.

Once committed in writing the company should, for its long-term benefit, honour it and pay the employee at the time of full & final settlement in the event of the employee's resignation. Hence it will not be considered a robbery even though the employee is not getting the compensation in his monthly component.

During the time of the salary discussion / negotiation the company should explain the benefit of any component of the salary that is not part of the monthly component like tax benefit (LTA, Medical reimbursement etc.), retiral benefit (PF, Gratuity etc.).

All this said, it will be easier to attract new employees only of the monthly component of the compensation is high.




What is CTC?


I think this issue will be cleared once the candidate gets his appointment letter. usually we give clear salary split-ups in appointment letter. at times of HR interview round we finalize the commercial part by getting his/her expected CTC and work out accordingly after negotiation.




Re: What is CTC?

WE NORMALLY INCLUDE :
GROSS SALARY,
PF,
ESI,
LEAVES,
BONUS,
GRATUITY
LTA,
MEDICAL
INSURANCE,
IN TO THE CTC BUT IF YOU GO DETAIL AS WE ARE INCLUDING APART FROM ABOVE IS

UNIFORM ,
CANTEEN,
TRANSPORT,
TRAINING COST,
GESTATION PERIOD EXPENCES ( WHEN A EMPLOYEES JOINS IT TAKES
MINIMUM 2 MONTHS TO PERFORM
TO HIS FULLEST )
PLACE TO SIT / ( BECAUSE IT HAS SOME MARKET VALUE )
STATIONARY COST
COMPANY'S SPONSER TOURS,
GIFTS AND INCENTIVES ( IF ANY )







What is CTC?
CTC or Cost to Company is defined as "the amount spend by a company to maintain an employee for a period of one year.

My suggestion is:

Any person whose accepting a new job should breakup the CTC into two.

1. Monthly Fix
2. Monthly Variable

And also look at whats Yearly fixed.

I think then a person would have an idea as to what exactly comes in Hand.





What is CTC?
Always better to explain in detail about the Cost 2 Company while job offering a prospective employee.
A prospective employee after recieving his offer letter the only question running in mind is ' What will be my Take home ? '. Its advisable to have Salary break up template more self explainatory viz; The Components of Gross, other Annual payments, Employers contribution PF, Deductions(both PA & PM) and thus giving no room for any robbery. So the impression is not lost rather gained more


abhishekks11 - Member Since: Feb 2008
Maintianing 40% or 60% of CTC in Basic Pay is not applicable for all company. Its vary from Company to Company. In general there is no thumb rules to maintain Basic Pay.

In private company, Company Management decide how much % of CTC will be given as Basic Pay.

In Govt. Company, GOI or its appointed body decides how Basic and others benefits will be given to employees.

Conclusion: No Thumb Rules for maintaining a minimum % of CTC as Basic Pay.

abhishekks11 - Member Since: Feb 2008
Dear All,
Maintianing 40% or 60% of CTC in Basic Pay is not applicable for all company. Its vary from Company to Company. In general there is no thumb rules to maintain Basic Pay.

In private company, Company Management decide how much % of CTC will be given as Basic Pay.

In Govt. Company, GOI or its appointed body decides how Basic and others benefits will be given to employees.

Conclusion: No Thumb Rules for maintaining a minimum % of CTC as Basic Pay.

Regards,
Abhishek

abhishekks11 - Member Since: Feb 2008
Dear All,

Maintianing 40% or 60% of CTC in Basic Pay is not applicable for all company. Its vary from Company to Company. In general there is no thumb rules to maintain Basic Pay.

In private company, Company Management decide how much % of CTC will be given as Basic Pay.

In Govt. Company, GOI or its appointed body decides how Basic and others benefits will be given to employees.

Conclusion: No Thumb Rules for maintaining a minimum % of CTC as Basic Pay.

Regards,
Abhishek

prasadaraopuli - Member Since: Jun 2008
As per my knowledge, Basic and DA should not be less than minimum wages as defined by Minimum Wages Act. This is perhaps to ensure more PF contribution from employer and employee...

sowmya23swamy - Member Since: May 2010
can somebody tell me what is the basic for employees who are working in small sized BPO in city like Bangalore....

elangovan_vellore - Member Since: Nov 2008
dear all
is there any specific ruling for maintaining specific% as basic, da, hra. etc.To the best of my knowledge, the competent authorities got the powers to check whether minimum wages in total as per the act are paid or not.
regards,
A Elangovan


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