In the Organization, I am currently working, some very senior members (GM Level) wants to increase their basic. Currently the Basic is 30% of CTC. They want to increase the basic to 40% or 50%. Can you please guide me as to what will be the implications on the Company if the basic is increased and how this can be avoided. I am unable to argue the same as they claim that this increase will help them save tax in their salary. My boss relies on me to give correct guidance on these matters.
Can someone help me with the same immediately.
30th June 2008 From India, Mumbai

Dear Raga,
Your company can increase the % of the basic, but please check with your account detpartment also as increasae in basic pay would actually increase a lot of coponents like PF and Gratuity increasing the financial burden.
30th June 2008 From India, Bangalore
Thank you Swati for your response. The thing is in our Organization the salary structure is on CTC Basis including both the PF. Thus increasing the basic does not effect the CTC. Could their be more reasons why we should not increase the basic and what are the other implications or problems that might arise in the future.
1st July 2008 From India, Mumbai
Dear Raga,
As per the statutory requirement the BP should be min 40% and max 60% of Gross Salary. It depends on the Company on what to opt.
As you are saying if the PF is included in the CTC than there wouldn't be much burden to the Company other than bearing the Administrative Charges of the same. (PF Policy is flexible)
Other than PF what are the other Components included in the CTC? If ESI is included than the Company contribution would be 3.75% on BP + DA.
Also discuss with your accounts department before forming any decision.
1st July 2008 From India, Hyderabad

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