Is Including Basic and DA in CTC Essential for Wage Calculation? Seeking Advice!

Hello Everyone,

This is Nidhi, newly joined at Cite HR. I don't know whether asking this is correct or not, but I need to know whether for calculating any wages and salary, having Basic and DA in the CTC structure is mandatory. Please suggest me.

Dear Nidhi,

Yes, it is mandatory to have basic and DA/Special allowance as a part of the monthly salary structure.

Hi,

Minimum wages specify Basic & Dearness Allowances. Also, companies with more than 100 employees need to pay HRA at 5% of Basic + DA. Additionally, HRA has certain taxation benefits for individuals staying on rent and providing a rent receipt; therefore, it is advisable to show Basic, DA, and HRA as separate items on the payslip.

Thank you.

Regards,
R H. Kavarana
HR Manager
Today From India, Mumbai

Dear Madam,

It depends on whether your establishment is covered under the Minimum Wages Act, and you are choosing to pay the same wages as prescribed. The Act prescribes basic and special allowance (DA) for each skill level.

However, if you pay more than the minimum wages, no law will require you to pay basic and DA as separate components in the structure. You can pay what is called consolidated wages (basic and DA merged).

Regards,
Vinayak Nagarkar
HR Consultant