40% Of Gross Salary As Basic. Is It Legally Correct? - CiteHR
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Dear Muralidharan
As a matter of fact the conveyance allowance Rs.800/- and 40% of Basic wages in the form of HRA is exempted from Income Tax.
The PF Authorities can claim in case the Basic wages fixed less than the minimum Wages fixed by the appropriate government for deducting the PF. If you are deducting the PF for more than the prescribed minimum wages, then the PF authorities cannot question you, regarding the deduction.
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Dear Mr Vathiraj, Your input has been invaluable!!!! I have amended our salary break-up accordingly. Thank you for all the help ! Warm Regards, Megha A
Dear Member
The ratio of 40% of CTC as Basic is decent enough.
As to minimum wages there is no binding in the law that says that your Basic should + DA should be equal to Minimum Wages. However if you follow the thread on the PF v/s G4S securities it is highly likely that the PF authorities will soon be demanding PF contributions on Basic or Minimum wages, which ever is higher.
So to keep your future costs in check and have a better salary breakup, it is suggested that the Basic should be equal to minimum wages.
Regards
Preetam Deshpande

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