Understanding Basic Salary: Is It Really 40% or 50% of Gross Pay?

anupriyaabhiram

Hi all,

I have a query regarding the calculation of basic salary. Is it a rule that 40% or 50% of gross pay constitutes the basic salary? Could someone kindly clarify this for me?

Thank you.

jeevarathnam

Hi,

There is no rule specifying that the basic salary should be 40% or 50%. It is calculated as 40% or 50%, and the rest is paid as other allowances to reduce the income tax for the employee and to decrease the overheads for the employer.

anupriyaabhiram

Thank you for your valuable information. Is the basic salary fixing percentage at the discretion of the company, or must it be 40% or 50%? Kindly clarify.

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