Understanding Basic Salary Rules: Is 15k Viable for a 1 Lakh Gross Salary?

Please explain what basics can be kept for gross salary of 1 lakh per month. Also, is there any rule regarding the basic as per the PF Act? In general, we keep 50% of gross as basic, but is it viable to keep 15k basic for a salary of 1 lakh? Please explain the basic rules as per the PF Act or other related rules and regulations.

Dear Mr. Bhardwaj,

Please find attached a copy of the EPF Tribunal judgment regarding PF contributions and the splitting of Minimum Wages, which is self-explanatory.

Regards,
N. Nataraajhan
Sakthi Management Services
HP: +91 94835 17402
Email: natraj@sakthimanagement.com

Dear Ritika Bhardwaj,

Basic can be kept between 40% to 60% of the gross; the rest of the entitlements can be calculated accordingly. For PF, also, the basic will be considered as per the MW Act. In the above case, what are you expecting? i.e. to escape PF liability for a 1 Lakh salary or do you want to pay.

If the percentage is 12%, it is a fixed value. Percentages for basic, HRA, and other columns in your payroll depend on your company. If you wish to maximize take-home pay, maintain the lowest percentage on your basic salary, for example, 20-30% on the gross. This strategy can help provide better take-home salaries for your employees.

Example Payroll Structure

Below is a perfect example of structuring your payroll based on a gross salary of 15,000/-:

- Basic: 20%
- HRA: 20%
- Conveyance: 10%
- LTA: 10%
- Medical: 10%
- Others: 10%
- FBP: 20%

Thank you,

Venkatesh

No, I want to pay, but at the same time, I want to know if anywhere it is written that we have to keep basic as 15000 for gross salary above 30k. Also, what basic can be kept for a salary of 100,000.

For salaries above 30k, there is no need to keep the basic at 15k. There is no such edict. You can set the basic as per your company's normative calculations. However, the critical factor to consider is whether the Basic+DA meets the guidelines of the MW Act. You can set a basic of 40k for a 1lac salary.

If you have any further queries, please contact at pradeep.vispl@gmail.com.

There is no rule on basic salary; it should be above the minimum wages of the particular state.

Hope this information is helpful to you.