there is no rule or clause in any Act, that basic must be 50% or 60% of the gross salary. This is being demanded by PF authorities of late and there is also circulr by PF authorities to their Officers, which is being circulated to various companies also.
I happened to attend a workshop convened by EFSI where one of the speakers was PF commissioner himself. when the same questions was raised by one of the participants, he clearly told that THERE IS NO RULE AS SUCH.
It is just becasue, if you have more basic fixed in the salary break up, the employee would get more benefits in terms of his pension, PF contribution (by the employer), etc. After all at the time of retirement, he needs money to run his family, is it not. Without this logic, there is no rule anywhere written in the Act, and that is what the PF commissioner conveyed in the workshop.
Now, many organizations are pressurized by PF authorities (by the internal circular they just floated), that the Basic (and DA) should not be less than the Minimum wages (prescribed by the Govt.). We need to deliberate on this.
Balaji