Minimum % Of Basic With Respect To Ctc - PDF Download

Dear All,

Since the latest limit for PF is Rs. 15,000, PF contributions stand at 12% of basic and DA. I am interested in understanding if there is a recommended percentage of basic salary to the overall Cost to Company (CTC). For instance, should the basic salary constitute 40% or 50% of the CTC? Your assistance on this matter would be greatly appreciated.

Please help.

As per PF notification, Basic should be 55% to 60%, not less than this. Please make sure that when you prepare CTC, the basic should fall within the above criteria.

Dear Arpan Naik,

Please provide PF, if any, for basic fixation of 55% to 60%, or any citations from court to that effect. It will be useful for our professionals.

Thank you.

Dear All,

Please find attached the file for PF amendments, which may be useful to everyone.

Thank you.

Dear Sir,

The attached information contains our personal opinions. If you have any official circular or notification from the PF department or the government, it would be more useful.

Which PF notification is being referred to that prescribes 55%-60% of the basic salary in CTC?

Please let me know if you need further assistance.

It appears that a lot of changes may be brought about in the labor legislations including ESI and others. I came across a PF directive in Rajasthan asking inspectors to compile a list of all who have deducted PF on Basic Salary of 50% or less of CTC. Though there is no legislation on how much the Basic salary should be as a % of CTC, the above could be indicative of the probability of legislation coming about in the future. Keeping Basic salary above 51% of CTC should be fine.

Raana Jitendra Pratap Singh Head HR, Girnar Software Pvt Ltd

There is no specific direction in the act that a certain percentage should be kept for basic salary, but bifurcation is done only on the basis of taxation liability. However, it is the accepted and factual view that the basic salary should not be less than the prescribed minimum wage of the state.

Thanks & Regards,

Sumit Kumar Saxena

Dear Mr. Arpan Ji,

There is no specific percentage of basic, etc., for PF. But there is only a notification stating, "Minimum Wages should not be split," i.e. (Basic + VDA) as notified by the appropriate Government.

Regards,
PBS KUAR

Dear Sir,

I would like to know if the ceiling has been increased from 6500 to 15000, is this applicable for all states.

If an employee draws a salary of Rs. 25,000/- with no other allowances, it is necessary to deduct PF or give them the option to have a PF account or not.

There is no such formal regulation imposing any specific percentage of Basic + DA in a Monthly PaySlip Gross Salary. However, at some places, PF Inspectors are insisting on such percentages ranging from 40% to 50%. It is a common practice adopted by many Employers and HR Managers to keep the Basic + DA at the lowest possible level compared to the rising monthly gross salary. The purpose is very simple: to minimize PF and other statutory liabilities (Gratuity, Bonus). If we view PF as a useful post-retirement benefit and a social security tool, then this mindset needs to change. I am sure PF and Government Authorities have taken notice of this, and regulations prescribing specific percentages of Basic + DA will become a reality sooner or later. Thanks.