Dear Friend,
Basic and DA are combined in Private industry and is set as Basic only for any further statutory calculations.
Basic should cover an employee minimum expenses.
It can be on an average set as follows.
Un-skilled employees <=3500
Skilled Employeess <= 4000
Highly skilled <=5000
Case 1)Let us suppose a employee joins with salary Rs.4000
Then give his Basic alone as Rs4000
Case 2)Let us suppose an employee monthly salary is Rs.5000
Set his basic as Rs.4000 and Other Allowance as Rs.1000
Case 3) If an employee Joins with salary Rs. 6000
Basic : 4000
HRA : 1000
MA : 500
TA : 500
Gross Rs. 6000
the break up for these salary is only for basic as we pay PF and ESI and the break up do not give the employees any benefits as they do not come into taxable limit.
Let his salary be Rs. 10,250
Basic: 7000
HRA : 3000
Others: 250
here total is 10,250 the advantage is the employer need not pay his PF or ESI contribution.
For the same structure of Rs. 10,000 if the company is paying PF and ESI
Basic: 5000
HRA: 2500 if office is in chennai, Mumbai, Kolkatta or Delhi else 40% of Basic
TA : 800
MA : 1250
LTA : 450
Gross: 10,250
Regards,
R.Ramamurthy