How Do You Determine the Minimum Basic Salary for Engineers in Mumbai?

We are an IT Solution Provider Company located in Mumbai, and the majority of our employees are Engineers and Technicians. I have a query regarding what should be the minimum basic salary for employees.

For example, if the gross salary is 20,000, what would be the minimum basic salary?

It would be greatly appreciated if anyone could help me out.

Regards,
Riyu Grewal

I am a manpower supplier, and the salary depends on the sector and the work done by the company. My suggestion is that the minimum gross salary for a fresher should be Rs. 16,000.

Thanks and regards,
Prabhakar

Are you looking to know what the salary levels are in Mumbai for IT professionals? Or are you asking how to compute/decide the salary structure?

Thank you!

You can follow this format:

- 40% of gross salary as Basic
- 30% of gross salary as HRA
- ₹800 as Transport allowance
- Other Allowances = Gross Salary Minus (40% + 30% + ₹800)
- Total of the above is the Gross Salary of the employee

Leaves

Professional Tax

PF 12% of Basic Salary (12% of 40%) if you are providing

You can call me to understand the necessary salary heads and deductions.

Regards,
Pulak
[Phone Number Removed For Privacy Reasons]

Hi, Salary component - The minimum salary depends on the skills and education level. You should do some research on the salary range that your competitors offer in order to retain talent. If you are hiring a fresher, the minimum salary should be sufficient for their survival in Mumbai. This is also known as per diem or daily expenses to survive in the city. You can set the salary close to that amount or slightly adjust it. The salary components can be determined once you have the CTC in mind. If you have any queries, please email me at [Email Removed For Privacy Reasons].

Thanks,
Pallavi

The minimum salary for an employee is based on your company's policy and funds allocation by the management. However, we must consider that the Cost to Company (CTC) of the employee is subject to various statutory vigilances by the government. It would be beneficial to establish a policy in your company based on the CTC. You can decide the basic salary to be 30% to 40% of the CTC, HRA at 50% of basic, conveyance as per company norms, and HRA should be 50% of basic + DA.

Thanks & Regards,
MANOHAR

Dear Riyu Grewal,

Understanding Basic Salary and Allowances

You posted a question about what should be the basic salary of employees. You have given an example of a gross salary of Rs. 20K. Here, I would like to explain the concept of basic salary and other allowances applicable thereon. In fact, the concept of basic salary arises when there is a properly structured pay scale attached to different levels of posts/designations according to job description and responsibilities.

A pay structure is designed starting with a minimum pay and ending with a maximum pay with stages of annual increments for a specified period of time, say stretched over a period of 15, 20, or 25 years. The pay structure is devised where there are other allowances, fixed or variable in nature. The concept of a pay scale also facilitates both the employee and employer to comply with the provisions of various statutes like the Income Tax Act, EPF Act, etc.

Designing a Pay Structure

The question of how much pay should be given for a particular post is decided by the employer depending upon various cost elements and the profit element required to manage and operate the business establishment. The pay structure, for example, can be designed as follows:

- Basic Pay - 60%
- HRA - 40%
- City Compensatory Allowance - 10%
- Transport Allowance (Fixed) - Rs. 1000/-
- Medical Allowance (Fixed) - Rs. 1500/-

The above is only a suggested pay structure. It can be adapted/modified by the employer as per their own financial resources.

I hope this clarifies your query.

With good wishes,

Regards,
C.M. Lal Srivastava
[Phone Number Removed For Privacy Reasons]