Understanding Salary Break-up Rules: Do They Vary by Industry or Company?

Can anyone guide me through the statutory rules of salary break-up? Does it depend on the industry, or does it vary from company to company?

Thanks & regards,
Dinesh

Basic and DA/VDA should be provided in accordance with the laws of the land. Allowances should be considered based on the income tax regulations and benefits.

Thank you.

Thank you very much. Please provide me with the breakdown of the Gross Salary as per statutory norms, such as Basic + HRA + Conveyance = Gross Salary. I am interested in understanding the percentage allocated to each component based on statutory regulations.

Thanks & regards,
Dinesh

Thank you very much, Mr. Sudhir, for sharing the file. I just want to know if the percentages you have shown in the sheet are in line with statutory norms. If so, could you please specify the relevant law?

Thanks & regards,
Dinesh

Salary breakup depends on the company because some organizations will calculate it based on 40%, 50%, or 60% according to the company's norms. This calculation is based on the CTC breakup, meaning it is calculated per annum from both sides, along with the benefits provided by the company.

Regards,
Sudhir Kumar

Our labor consultant informs us that the basic salary should be a minimum of 60% of the Gross Salary drawn by the employee. Is this correct? Can anyone please provide the specific rule or clause which states this as a rule?

I have seen a number of payslips where the basic salary is less than 30% of the Gross Salary drawn. Even in the example given, the Basic is shown at 30% of the gross. Our earlier basic was 50% of the basic salary, and subsequently, we have gradually increased it to 60% of the Basic.

Please advise the exact rule. We are based in Karnataka.

Regards

My view on salary breakup should be as follows:

Basic Salary
- 50%-55% of the gross salary. It is important to note that the basic salary should not be less than the minimum wages of the state.

HRA
- 40% of the basic salary.

Conveyance
- Rs.800/-. Anything above this amount will be taxable.

Educational Cess
- Rs.200/-

Medical Allowance
- Rs.1250/-. Anything above this amount will also be taxable.

The remaining amount should be categorized under other allowances.

Thanks & regards,
Sumit Kumar Saxena

Thank you very much, sir. You mean to say that as per statutory norms, we have to keep in mind that the basic salary should not be less than the minimum wages of that particular state (irrespective of percentage).

Thanks & regards,
Dinesh

Can you please explain to me what VDA means and whether it is included in the salary breakup or not?

Regards,
Archana Rane

Dear Hitesh,

Yes, PF is applicable to Food Allowance. The component for EPF contribution should be Basic + DA/VDA + food conc. (if any). The Basic + DA should not be less than the minimum wage defined by the state government from time to time.

Thanks & Regards,
Sumit Kumar Saxena

All the rules, whatever all of you are saying, are right. But the salary breakup procedure depends on the company's policy.

Salary Breakup Procedure

In some companies, it will be:
- CTC: 50,000
- BASIC: 40 to 50% of CTC
- HRA: 40% of BASIC for non-metro cities, 50% for metro cities
- CON: 800
- WASHING or EDUCATION: 200

Thanks & Regards,
Mr. Ajit Vishnoi
HR

Understanding Salary Break-Up

Gross is 40% - 50% of CTC. Basic is 50% of Gross. Conveyance is $800 flat. Other categories depend on the management's structure.

Regards,
Raju
Chennai