How Do You Calculate Basic Salary from CTC? Looking for a Simple Formula!

Could anybody tell me how to calculate the basic salary from CTC with a formula? Please help me.

Could you tell me why this formula is used for basic salary?

Formula Explanation

=ROUND(SUM(C3-500)*100/192,0)

Regards

Let's assume your CTC per annum is 200,000. If you divide this by 12, you will get your Monthly CTC, which means 200,000/12 = 16,666 per month.

Next, you can consider either 40% or 50% of this CTC as your Basic salary. For example, if you take 50% of 16,666, the calculation would be 16,666 * 50/100 = 8,333 as your monthly Basic salary.

I hope this clarifies the calculation process for you. Let me know if you need further assistance or information.

Recently, I am also working as an HR with one company, but my specialization is not finance. I need human resource policy and the criteria of payroll, specifically how to calculate when we have to provide only basic salary. Please, can anyone provide me with the format of a leave policy for any organization?

Regards.

Formula for Calculating Basic Salary from CTC

A reasonably good formula to adapt is as follows:

1. 35% of CTC as Basic.
2. 30% of CTC as Monthly allowances like HRA, Conveyance, etc.
3. 5% of CTC as annual benefits like LTA, etc.
4. 20% of CTC as Bonus or Performance payment. This will be a variable pay.
5. 10% of CTC towards PF, Gratuity, and other social security measures.

This formula generally works well. A few modifications in percentages can be made to suit your requirements.

Regards,
T. Sivasankaran

Understanding Basic Salary Calculation

Basic salary depends on the grade/level of the employee and may vary from company to company. Each company may have different salary slabs for various grades/levels of employees, with lower grades receiving lower basic salaries. The basic salary typically ranges from 30% to 50% of the gross/CTC.

Regards

The exact calculation of the Basic Salary from CTC cannot be done until all the components of the salary are identified. Taking "Basic Salary" as a reference point, CTC is derived, and not the other way around.

Regards

Understanding CTC Components

The components of CTC differ from company to company. There is no specific compulsory percentage to be deemed as Basic from the Gross or CTC. In the case of Minimum wages, we take Basic approximately 80-95% of Gross, while in other cases, i.e., higher slab, it may be deemed approximately 40-50% of Gross.

Regards,

Understanding CTC and Basic Salary Calculation

CTC includes Basic + Other allowances + Annual benefits + Fringe benefits (Total salary + Other emoluments) per annum. CTC differs from one concern to another as per their policy. Normally, Basic Pay will be 30 to 50% of CTC. Divide this by 12 to get the per month emoluments as per company policy.

Regards,
D. Gurumurthy
LL, HR & IR Consultant
Hyderabad.

The percentage of Basic, HRA, Conveyance, and Medical is calculated as per the law or depends on company policy. If these are decided by law, then please guide me on the related act for this.

Regards,
Himanshu Trivedi.

Dear All, can anyone tell me what the state government has decided regarding the minimum wage that should constitute the in-hand salary or basic pay? For example, if the Delhi government's minimum wage is 10,686, then what should we keep as the basic pay - the same amount or could it be anything else?

Regards,
Lalit Mathpal

Hi HHH123,

This is Nisha. I was going through the thread discussion, and I did not understand how the calculation below is done. I have reviewed the Excel sheet.

Could you please explain the formula below?
=ROUND(SUM(C3-500)*100/192,0))

Thank you.

Hi, kindly help me with the salary structure for Rs. 22,000, Rs. 15,000, and Rs. 10,000 as the final in-hand salary that we receive. I need the HRA and DA allowances structured for this. No PF is deducted.

Salary Calculation Methodology

Nisha, I have gone through the Excel sheet. This company has probably followed the following methodology:

1. Assume 100 is equal to Basic
2. 100 Basic
3. 40 HRA
4. 15 CON
5. 5 CEA
6. 12 PF
7. 4.75 ESI
8. 4 Gratuity
9. 8.33 Bonus
10. 3 Uniform
11. 192.08 Total
12. 192 Round off

They probably would have reached 192 using the above methodology. If 192 is CTC, then 100 would be Basic. They must have some reason to subtract Rs 500, which is the Uniform allowance. It is purely an internal calculation. But more or less, they have followed the above methodology. This is also one of the easiest ways of arriving at the structure. This will bring Basic closer to 52% of CTC. This will work out well at lower salary brackets.

Regards, Sivasankaran