Salary Breakdown Confusion: Does Basic Salary Percentage Change by State?

sumansharma441@gmail.com
What is the percentage of basic salary in the salary breakdown, and does it vary from state to state?
RedStarGroup
There is no fixed percentage to base it upon the gross. However, you need to consider the following factors to establish that you have settled on the right percentage:

1. Your basic wages (in the absence of DA) should be more than the minimum wages payable to the employee as per the Minimum Wages Act. (This is determined by the respective state government and is industry-specific).

2. Any allowances that you provide other than the basic should serve a specific purpose (e.g., HRA for house rent allowance, conveyance for commuting, medical for health, etc.).

3. Please remember that having an exorbitant amount as a "special allowance" may lead to questions from the Provident Fund commissioner, suspecting an attempt to evade PF contributions.

By adhering to the above norms, you should aim for around 40% of the gross as the basic salary, which can be managed effectively.

Regards
Shyam Agrawal
Basic is basic. All other allowances are granted on a certain percentage of the basic pay. Hitherto, PF was to be deducted at 12% of basic plus dearness allowance and dearness pay, if any. Hereafter, all other allowances are also to be counted for PF contribution, as I read in the press. This needs to be confirmed from the PF website.

Thanks & regards,
Shyam Agrawal
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