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
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From India, Hyderabad
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You can have any structure but ensure that the Basic&DA is not lesser than the minimum wages
From India, Bangalore
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726From India, Bangalore
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Hello Priyanka.K.
There is no issue whether the basic will be at 40% or 50%. There's no stipulation in the rule books at present. However, once the new Code on Wages is to be implemented, there is a compulsion pegged at a minimum of 50% of the 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 recognized 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 of what is included under CTC and its quantum, and all those are not meant to be disbursed in cash on a 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 the consequential financial burden is going to be countless, unbearable, or prohibitive. This is because various employee benefits, not payable in cash under various acts if and when applied on a monthly basis, would be based on Basic pay as per various applicable acts in vogue.
That apart, are you empowered to take a decision on these vital policy guidelines?
From India, Bangalore
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There is no issue whether the basic will be at 40% or 50%. There's no stipulation in the rule books at present. However, once the new Code on Wages is to be implemented, there is a compulsion pegged at a minimum of 50% of the 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 recognized 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 of what is included under CTC and its quantum, and all those are not meant to be disbursed in cash on a 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 the consequential financial burden is going to be countless, unbearable, or prohibitive. This is because various employee benefits, not payable in cash under various acts if and when applied on a monthly basis, would be based on Basic pay as per various applicable acts in vogue.
That apart, are you empowered to take a decision on these vital policy guidelines?
From India, Bangalore
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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 the last basic drawn, so ensure that you have factored that into 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 the Code on Wages is that it cannot be lower than 50%; you can have it higher. Further, it is 50% of gross wages, including the employer's contribution to PF and bonus, not 50% of CTC.
From India, Mumbai
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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 the Code on Wages is that it cannot be lower than 50%; you can have it higher. Further, it is 50% of gross wages, including the 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