Understanding Salary Breakup: How Do Basic, HRA, and Other Components Work?

Dear all, I want to know:

Salary Breakup Allocation

1. When creating a salary breakup, what is the percentage allocated to Basic, HRA, conveyance, and Medical according to statutory laws?

HRA and Home Ownership

2. If an employee owns a house and is paying the loan for it, will they be provided with HRA, and will this affect their salary breakup?

Waiting for your reply.

When it comes to the Minimum Wages Act, it contains three slabs in which employees are categorized as:

1. Skilled
2. Semi-Skilled
3. Unskilled

The Minimum Wages Act varies from state to state and also depends on the type of industry or company registered under Shops & Establishments. You can directly obtain these details online.

When discussing the basic pay, the ultimate decision is made by the company without violating the Minimum Wages Act.

Salary Structure Example

The salary structure could be as follows (example):

- Basic Salary: Rs X/- (please consider every Rs X/- as basic salary)
- HRA: Rs X/- * 40% (based on the company's discretion)
- Professional Development Allowance: Rs X/- * 20%
- Local Conveyance Allowance: Rs X/- * 10%
- Medical Allowance: Rs X/- * 10%
- Leave Travel Allowance: Rs X/- * 10%
- Employee PF Contribution: Rs X/- * 12%
- Company CTC: Rs X/- * 202% { Performance pay or bonus or variable pay: Rs X/- 100% (this is optional depending on the industry) }

Deductions

- Employee PF Contribution: Rs X/- * 12%
- Employer PF Contribution: Rs X/- * 12%
- ESI (optional based on manpower or availability of ESI dispensary): Rs X/- * 4.75%
- Gratuity (optional): Rs X/- * 5%

Regards

Salary Breakup Provisions in the Act

What is the provision in the Act for the breakup of salary? In the government, how do they provide the salary breakup to the worker?

Regards,
Sudhir Patil

Hi Sri, just joined a few minutes ago. Reading through your request, it sounds like you need to understand the law provisions and acts of employment in your business to determine what capacity these employees are entitled to. Calculations are set within country laws themselves, as laws vary depending on what the constitution deems suitable within the environment of each country and business. Therefore, if you have a corporate services department, the HR management should have knowledge of this, and the financial executive manager should be the key person to consult for calculations. It's one of the qualifications that are important skills for your organization.

Cheers,
Telesia