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Hello HR Professionals,
I have a query about what is the minimum proportion of Basic component in a CTC Structure?
The scenario behind this question is if I want to prepare a salary structure where the Annual CTC is 9 lakhs in which the Variable Payout is 4.8 lakhs and 4.2 lakhs is the Fixed Annual CTC which we will be offering ,and the Basic component which I want to provide is 40% of the Fixed Annual CTC (4.2 lakhs) and not the Total CTC (9 lakhs).So will there be a statutory violation in this regards?
Please help

From India, Kolkata
HI Shubho,

First of all 'CTC' it is not a term/component referred to any acts or rules nor dealt by courts. If you would use the 'search' option box at the top of this page you can see complete list of discussions had in this forum on CTC which will be of help to know more about on your query. Generally CTC is divided in two parts - i) Cash cost, which determine the take home pay comprising monthly earnings, deductions/recoveries and Net Pay credited to the employees' bank a/cs. (ii) Annual charges like employer's contribution to EPF a/c, gratuity, leave salary, bonus, insurance premium paid by the employer which are generally not paid monthly but payable as and when accrued and due. There are no prescribed lower & upper limits of any component in CTC except Minimum wages to be adhered to which is not applicable to the referred instance. Therefore you are not exposed to any violation on a/c of CTC.

From India, Bangalore
Dear Friends,
I think we should be up-dated our-self before responding to any query and / or appreciating any response, at least by senior members.
I agree that CTC is a concept and it is not wage or salary. However, I would like to draw the attention of the seniors that the Cod on Wages which is a Law of our Country now though the same has not started implemented, has given a place of CTC.

From India, Mumbai
If your Basic salary is not less than the sum of basic and DA as per the notified minimum wages, the structure could be fair. Otherwise, it will be unfair and illegal.

By keeping 40% of the fixed salary as basic, will you consider this basic as wages for all purposes including for deduction due to leave without pay? No. When an employee takes a leave without pay, you will take the gross salary and for calculating his gratuity you will take only basic pay that you fix, that is illegal. There are court orders directing the employer to pay gratuity on notified minimum wages. The basic wage under Provident Fund Act is also the total salary which should include all allowances. Though HRA is excluded, which kind of HRA is excluded should be noted. HRA as part of salary and paid to all employees, whether they reside in rented houses or not, cannot be considered as rent allowance. As such the total salary qualifies for basic salary. Then why should the HR persons try to structure a salary with lot of small components in it?

From India, Kannur
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