Salary Calculation Confusion: Can Someone Explain How to Figure Out Basic Pay?

Hello,

Can anyone clarify the calculation of basic salary? :icon14:

URGENT

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Basic salary is usually ranging from 35-60% of the CTC package that you have fixed for the candidate. However, you may wish to reduce that amount as well and add it to other headings because the more basic you keep, the higher will be the deduction for PF (12% of basic). I hope this satisfies your queries.

Hi,

The basic salary mostly depends on the city or standard of living and will differ from city to city. As one of our colleagues mentioned, it is typically 35% to 40% in most companies. We follow a policy of setting the basic salary at 50% of the gross salary. However, when considering the employee's cost to company (CTC) in terms of salary, the basic salary will have a more significant impact.

Dear All,

The minimum basic salary should be 75% of an employee's gross salary if no allowances are provided extensively. However, if D.A, H.R.A, and C.C.A are provided, then the basic salary can be reduced to 60% of the gross, which is the minimum.

Ref:
As per the Provident Fund Act of 1952.
You can also contact any of the P.F. officers before fixing the salary components. This is how we follow in our organization.

Regards,
Dinesh.R
9962359250

There is no hard and fast rule for fixing basic salary. No act or rule talks about BP fixation. Generally, as a matter of extreme caution, it is fixed between 30 to 35% of the total salary, inclusive of all allowances. If the salary is considered as consolidated pay, then the total salary is considered as BP for PF calculation, etc. (But this is very rare).

Fixation of basic pay varies from organization to organization. But it is better to follow a regional pattern always.

Gopan

To calculate the basic salary based on the gross, you can follow these steps:

If your Cost To Company (CTC) is 10k and the basic salary is 40% of the CTC, then the basic salary would be calculated as follows:
Basic Salary = CTC * Basic %
Basic Salary = 10,000 * 40%
Basic Salary = 4,000

Furthermore, if the HR component is 50% of the basic salary, you can calculate the HR component as follows:
HR Component = Basic Salary * 50%
HR Component = 4,000 * 50%
HR Component = 2,000

After determining the basic salary and the HR component, you can then calculate other allowances based on your company's policies and structure.

I hope this guidance helps you in understanding how to calculate the basic salary and related components. If you need further assistance, feel free to ask.

To calculate the basic salary based on the gross, you can follow these steps:

First, determine your Cost to Company (CTC) which is 10k.
Calculate the basic salary by taking 40% of the CTC.
Next, calculate the HR component which is 50% of the basic salary.
Consider other allowances that may be part of the overall salary structure.

I hope this helps guide you in determining the basic salary from the gross amount.

Is it compulsory to keep the same percentage of basic salary for each employee?

Regards,
Madhura

Fixation of basic salary depends on the grade as well. It can fall into a bracket of 30% to 60%, and this range can differ from company to company.

Shibom

There is no standard ruling I have seen yet for fixation of Basic Salary. Just one thing is important; it should be between 30 to 60%, and a uniform pattern should be followed in the organization for each and every employee. That is it!