Is There a Rule About Basic Salary Being 50-60% of Total CTC? Let's Discuss

Friends, is there an official communication or guideline that states the basic salary should be 50-60% of the total CTC? Thank you.

Ganesh, as correctly said by Pon, it depends on the company policy. My company fixed it at 55% of the gross.

Dear Seniors, as I know, x% of gross is the basic, which mainly depends on the company policy. However, in the above posts, it has been mentioned that X% of CTC is basic. Which one is correct? Please do clarify. I also need to know if CTC is given, then how can we calculate the basic for a particular employee.

Regards,
Shweta Singh

No, there is no fixed percentage for Basic from CTC.

In the aviation industry in India, a line pilot earns almost 50 to 100 times his basic pay! (A line pilot earns about 5 Lacs per month, but his basic pay is Rs 5000 - the rest is all allowances).

In most reputed companies, the Basic scale is linked to the position the employee is recruited for - e.g., the Basic Pay for an Asst Manager is the same, irrespective of the department. However, the CTC differs based on the job performed by the individual. For example, a technical manager may receive a higher (or lower) CTC compared to a marketing manager due to PLI, etc. But the pecking order for both (Manager designation) will be the same as per the company's hierarchy and promotions.

Regards,
Rajusiachen

Fixing the basic salary in CTC mainly depends on the employer. There is a limitation to fix the basic in CTC; it's a minimum of 35% to 70%. If we have to give a CTC up to 150,000/-, we have to set up the basic as per our employer. The remaining amount will go towards other allowances. I hope you understand my way of explanation.

When one PF inspector visited our company a few months ago, he informed us that the basic salary should be a minimum of 50% of the total CTC.

Understanding PF Contribution Limits

Usually, when PF cases arise, they may go up to a maximum of 60% as the basic for the computation of PF contributions. Even though there are no written guidelines in the PF act and norms, a commissioner may enforce the 60% limit. Up to 60%, he will win, so for the employees who fall under the PF range, the basic may be taken as 60% and less allowance, with the rest being less than that, i.e., more allowance. Furthermore, a standard 60% may be opted for.

[QUOTE=aparajitaaks;1702772]Dear All, When a PF inspector visited our company a few months ago, he informed us that the basic salary should be a minimum of 50% of the total CTC. Without knowing the pay structure, it is difficult to comment. The basic should not fall below the minimum wages.

Pon

There is no such rule to fix the percentage of gross as Basic. From both the employee and employer perspectives, a higher level of basic isn't efficient. As the basic increases, so does the cost of the rest of the components related to Basic. The tax saving of the employee also decreases with lesser bifurcation of CTC into various components.

Fixing Basic as a Percentage of Gross

Fixing up basic as a percentage of the gross helps in bringing uniformity in the compensation structure and fixing grades and levels. The average Basic maintained in comparison to the CTC as per current industry standards is between 25% - 30% in the service sector and 30% - 40% in the manufacturing sector.

Regards,
Pratima