I am working in a manufacturing company. The company's salary policy includes a basic salary at 40% of the gross, HRA at 24% of the gross, CA at 18% of the gross, and MA at 18% of the gross. The company calculates PF deduction based on the basic salary (40% of gross). However, for bonus calculation, the company considers basic wages as (basic + CA + MA).
Query on Basic Salary Calculation
My query is, which basic salary should be considered as per the act? Are there any allowances included in the basic salary? Please provide me with evidence or a reference for the definition of basic salary. Please clarify my query.
Thanks and Regards,
Ramesh Jadhav
[Phone Number Removed For Privacy Reasons]
From India, Pune
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2Query on Basic Salary Calculation
My query is, which basic salary should be considered as per the act? Are there any allowances included in the basic salary? Please provide me with evidence or a reference for the definition of basic salary. Please clarify my query.
Thanks and Regards,
Ramesh Jadhav
[Phone Number Removed For Privacy Reasons]
From India, Pune
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In your case, if 'CA' means City Compensatory Allowance or something similar, the bonus is to be calculated on Basic + CA but not MA if it means Medical Allowance.
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From India, Mumbai
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Regards
From India, Mumbai
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Understanding Basic Pay and Allowances
Basic pay is consistent across different scenarios. It is deducted from your gross salary and may range between 30% to 60% of your gross pay, depending on the company's policies.
Allowances do not include the basic pay, but the percentage of allowances is calculated based on the basic pay. For example, if your gross pay is 30,000 per month and the basic pay is 40% of 30,000, it amounts to approximately 12,000 per month. Thus, it will be 12,000 (basic pay) multiplied by whatever percentage your allowances are.
Basic Salary Regulations
Basic salary is the fixed, invariant, minimum wage mandated by the company to compensate employees. According to legislative regulations, 30% to 60% of your salary should be your basic pay, meaning not less than 30% of your gross pay or take-home salary and not more than 60% should be basic pay. Since it is fixed by legislation, all other necessary calculations for allowances and deductions are based on the basic pay.
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From India, Bangalore
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Basic pay is consistent across different scenarios. It is deducted from your gross salary and may range between 30% to 60% of your gross pay, depending on the company's policies.
Allowances do not include the basic pay, but the percentage of allowances is calculated based on the basic pay. For example, if your gross pay is 30,000 per month and the basic pay is 40% of 30,000, it amounts to approximately 12,000 per month. Thus, it will be 12,000 (basic pay) multiplied by whatever percentage your allowances are.
Basic Salary Regulations
Basic salary is the fixed, invariant, minimum wage mandated by the company to compensate employees. According to legislative regulations, 30% to 60% of your salary should be your basic pay, meaning not less than 30% of your gross pay or take-home salary and not more than 60% should be basic pay. Since it is fixed by legislation, all other necessary calculations for allowances and deductions are based on the basic pay.
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From India, Bangalore
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Hey Bhaskar , In my company Basic salary is calculated "Gross-CCA=(Whatever) 70% is taken as basic. Example my salary is 30000-1000(CCA)= 29000 of 70% 20300 is taken as basic salary . Is it correct ?
From India, Mumbai
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From India, Mumbai
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I am working in a manufacturing company. The company's salary policy is as follows: basic salary at 40% of gross, HRA at 24% of gross, CA at 18% of gross, and MA at 18% of gross. The company calculates PF deduction based on the basic salary (40% of gross). However, for bonus calculation, the company considers basic wages as (basic + CA + MA). My query is, which basic should be considered as a basic salary as per the act? Are there any allowances included in the basic salary? Please provide evidence or a reference for the definition of basic salary. Kindly clear my query.
Thanks, Regards,
Ramesh Jadhav
[Phone Number Removed For Privacy Reasons]
Bonus Calculation Clarification
For bonus calculation, only the basic salary should be considered. Different companies have different policies. Some companies pay bonuses based on the basic salary and Ex-Gratia on other allowances. Each company has a different composition of gross salary and CTC as per its policy.
Best regards,
Nitin
From India, Mumbai
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Thanks, Regards,
Ramesh Jadhav
[Phone Number Removed For Privacy Reasons]
Bonus Calculation Clarification
For bonus calculation, only the basic salary should be considered. Different companies have different policies. Some companies pay bonuses based on the basic salary and Ex-Gratia on other allowances. Each company has a different composition of gross salary and CTC as per its policy.
Best regards,
Nitin
From India, Mumbai
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Computation of Bonus Under the Bonus Act
Wages for the purpose of computation of bonus payable under the Bonus Act shall consist of Basic + DA + food allowance if any paid. Thus, if the salary paid by a company to an employee consists of Basic + DA, then both components need to be included for computation of bonus, subject, of course, to the wage limit of Rs. 3500/- p.m prescribed under the Act. If the salary paid by a company consists only of Basic + other allowances like traveling allowance or medical allowance, then only the Basic needs to be taken for computation.
Regards,
B. Saikumar
Mumbai
From India, Mumbai
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Wages for the purpose of computation of bonus payable under the Bonus Act shall consist of Basic + DA + food allowance if any paid. Thus, if the salary paid by a company to an employee consists of Basic + DA, then both components need to be included for computation of bonus, subject, of course, to the wage limit of Rs. 3500/- p.m prescribed under the Act. If the salary paid by a company consists only of Basic + other allowances like traveling allowance or medical allowance, then only the Basic needs to be taken for computation.
Regards,
B. Saikumar
Mumbai
From India, Mumbai
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SALARY SHEET CALCULATION.xls
Salary calculation.doc