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I am very confused about basic amount of CTC, is there any law regarding basic amount, how to fix basic amount - is there minimum or Maximum boundary for basic amount, on which basis the amount of basic to be fixed. Please help me.
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This is a total "Cost to the Company" for engagement of an employee. The cost includes Basic salary, House rent allowance, conveyance allowance, management contribution on ESI & PF and annual payment of Medical allowance, Leave Travel Allowances, Superannuation payable to LIC if any and some cases Gratuity payable after continuous period of 5 years.
Present scenario, it is called "Pay Basket" ( total cost figure, the Company could incur due to that employment). during perks deciding time, after selection process are over. Some multinational gives the chance to decide how much to be in each head, for the newly recruited them self to consider.
Normally the Basic Pay is decided around 55 to 60 percent.
Generally, it is 40% to 50% of CTC (Cost to Company). Statutory components like PF, bonus, gratuity and other benefits like LTA are calculated based on this amount. Hence increase or decrease in basic salary may impact CTC of an employee.
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