In my current organization, the calculation of basic salary is 40% of Monthly gross. I want to restructure the entire CTC structure of the organization, can I keep basic salary as 50% of CTC instead of gross?
From India, Hyderabad
From India, Hyderabad
You can have any structure but ensure that the Basic&DA is not lesser than the minimum wages
From India, Bangalore
639From India, Bangalore
Hello Priyanka.K.
There is no issue whether the basic will be @ 40% or 50%. There's no stipulation in the rule books as at present. However once the new Code on Wages are to be implemented there is a compulsion pegged at a minimum of 50% of gross salary. That's not too far I hope. However your attempt to link it with CTC leads you nowhere. This is because CTC is not yet recognised in our statute and there is no uniformity either in its concept or in components across various sectors of our economy. I hope you are aware what are included under CTC and it's quantum and all those are meant not to be disbursed in cash on monthly basis similar to disbursing the salary. Needless to elaborate further. But it doesn't mean many of these components can't be codified and quantified, broadly. But still no employer is going to accept your ambitious 50% on CTC for the simple reason that consequential financial burden going to be countless/unbearable/prohibitive. This is because various employee benefits, not payable in cash under various acts if and when applied on monthly basis would be based on Basic pay as per various applicable acts in vogue.
That apart, are you empowered to take decision on these vital policy guidelines ?.
From India, Bangalore
There is no issue whether the basic will be @ 40% or 50%. There's no stipulation in the rule books as at present. However once the new Code on Wages are to be implemented there is a compulsion pegged at a minimum of 50% of gross salary. That's not too far I hope. However your attempt to link it with CTC leads you nowhere. This is because CTC is not yet recognised in our statute and there is no uniformity either in its concept or in components across various sectors of our economy. I hope you are aware what are included under CTC and it's quantum and all those are meant not to be disbursed in cash on monthly basis similar to disbursing the salary. Needless to elaborate further. But it doesn't mean many of these components can't be codified and quantified, broadly. But still no employer is going to accept your ambitious 50% on CTC for the simple reason that consequential financial burden going to be countless/unbearable/prohibitive. This is because various employee benefits, not payable in cash under various acts if and when applied on monthly basis would be based on Basic pay as per various applicable acts in vogue.
That apart, are you empowered to take decision on these vital policy guidelines ?.
From India, Bangalore
There is no restriction on the Basic being higher.
However, you need to consider the impact of the same on various benefits / statutory dues.
For PF, there is a cap of ₹ 15,000 so having a basic higher than that is not going to impact the PF payable.
However, for gratuity, it is payable based on last basic drawn, so ensure that you have factored that in your provisions.
The restrictions (min 50% of Gross Wages) will apply after the Code on Wages is implemented in India. Till then, there is no restriction. Remember the limit in Code on Wages is that it can not be lower than 50%, you can have it higher. Further, it is 50% of gross wages including employer's contribution to PF and bonus, not 50% of CTC
From India, Mumbai
However, you need to consider the impact of the same on various benefits / statutory dues.
For PF, there is a cap of ₹ 15,000 so having a basic higher than that is not going to impact the PF payable.
However, for gratuity, it is payable based on last basic drawn, so ensure that you have factored that in your provisions.
The restrictions (min 50% of Gross Wages) will apply after the Code on Wages is implemented in India. Till then, there is no restriction. Remember the limit in Code on Wages is that it can not be lower than 50%, you can have it higher. Further, it is 50% of gross wages including employer's contribution to PF and bonus, not 50% of CTC
From India, Mumbai
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CTC Structure-1.pdf
CTC Structure.xls