Respected Seniors,
I have gone through many posts regarding the percentage of basic salary in CTC. Some said it is between 20 to 40%, some said 45%, and somewhere I saw 51.63%. Is there a fixed percentage that exists or does it depend upon company policies? I am a bit confused.
Sandeep Singh Bhati
HR Executive
7737901700
From India, Delhi
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1I have gone through many posts regarding the percentage of basic salary in CTC. Some said it is between 20 to 40%, some said 45%, and somewhere I saw 51.63%. Is there a fixed percentage that exists or does it depend upon company policies? I am a bit confused.
Sandeep Singh Bhati
HR Executive
7737901700
From India, Delhi
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There should be no confusion about the basic component of a CTC. The basic component is not governed by any regulation except that it should not be lower than the minimum wages declared by the government.
I have had organizations give 80% basic and some even 30%. It all depends on the company policy and the salary structure that they follow.
Cheers
From India, Delhi
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I have had organizations give 80% basic and some even 30%. It all depends on the company policy and the salary structure that they follow.
Cheers
From India, Delhi
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Respected Seniors,
Actually, I am a total fresher in HR. I want to know how PF, ESI, and gross salary are calculated. Please guide me with some example formats. Also, provide me with information about Professional Tax. What is City compensatory allowance?
Regards,
Sujata
From India, Bhubaneswar
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Actually, I am a total fresher in HR. I want to know how PF, ESI, and gross salary are calculated. Please guide me with some example formats. Also, provide me with information about Professional Tax. What is City compensatory allowance?
Regards,
Sujata
From India, Bhubaneswar
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Dear All,
Can anyone tell me how to get feedback (interview) from top management? I have sent emails, but received no reply. Additionally, there has been no response on Skype or Google Talk. Could you suggest how to obtain feedback from top management?
Regards,
Jags.
From India, Visakhapatnam
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Can anyone tell me how to get feedback (interview) from top management? I have sent emails, but received no reply. Additionally, there has been no response on Skype or Google Talk. Could you suggest how to obtain feedback from top management?
Regards,
Jags.
From India, Visakhapatnam
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@ Jags,
Why are you seeking an interview with the top management? What is the purpose? What email have you sent to them? If you can tell us, then maybe, just maybe we could be of some help to you. But here is my opinion on this generic question: Should you try to contact your top management for feedback? Are you confusing feedback with complaints? In your attempt to be heard, are you becoming an irritant? Think, analyze, and then react.
Cheers!!!
From India, Delhi
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Why are you seeking an interview with the top management? What is the purpose? What email have you sent to them? If you can tell us, then maybe, just maybe we could be of some help to you. But here is my opinion on this generic question: Should you try to contact your top management for feedback? Are you confusing feedback with complaints? In your attempt to be heard, are you becoming an irritant? Think, analyze, and then react.
Cheers!!!
From India, Delhi
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Hi Sujatha,
PF is 12% from the employee's side and 12% from the employer's side. Out of the 12% from the employee's contribution, 3.67% goes to his EPF, and 8.67% goes to his EPS account. PF 12% is calculated based on his/her basic salary, which in turn is calculated in his/her gross salary. The percentage of the basic salary depends on the company's policy.
ESI totals 6.50%, with the employee contributing 1.75% and the employer contributing 4.75%. ESI is calculated based on his/her gross salary.
Thanks & Regards,
Valan
From India, Madras
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PF is 12% from the employee's side and 12% from the employer's side. Out of the 12% from the employee's contribution, 3.67% goes to his EPF, and 8.67% goes to his EPS account. PF 12% is calculated based on his/her basic salary, which in turn is calculated in his/her gross salary. The percentage of the basic salary depends on the company's policy.
ESI totals 6.50%, with the employee contributing 1.75% and the employer contributing 4.75%. ESI is calculated based on his/her gross salary.
Thanks & Regards,
Valan
From India, Madras
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Hi Sujata,
PF is 12% from the employee side and 12% from the employer side. From the 12% employee contribution, 3.67% goes to the EPF, and 8.67% goes to the EPS account. PF 12% is calculated on his/her basic salary, and the basic salary is calculated in his/her gross salary. The basic salary percentage depends on the company policy.
ESI is a total of 6.50%, with the employee contributing 1.75% and the employer contributing 4.75%. ESI is calculated in his/her gross salary.
Thanks & Regards,
Valan
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From India, Madras
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PF is 12% from the employee side and 12% from the employer side. From the 12% employee contribution, 3.67% goes to the EPF, and 8.67% goes to the EPS account. PF 12% is calculated on his/her basic salary, and the basic salary is calculated in his/her gross salary. The basic salary percentage depends on the company policy.
ESI is a total of 6.50%, with the employee contributing 1.75% and the employer contributing 4.75%. ESI is calculated in his/her gross salary.
Thanks & Regards,
Valan
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From India, Madras
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Dear sir, Is it any particular rules for basic fixation or it is depends on the company policy...?
From India, Bangalore
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From India, Bangalore
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Dear Sandeep,
The ideal ratio is 40% Basic and 60% Allowances. Employers keep the basic salary at a minimum for various purposes, such as indirect benefits (PF, ESIC), bonuses, gratuity, and increments. It is always advisable to allocate a higher percentage to allowances, as properly named allowances can provide income tax benefits.
Regards,
Rahul Bagale
From Korea
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The ideal ratio is 40% Basic and 60% Allowances. Employers keep the basic salary at a minimum for various purposes, such as indirect benefits (PF, ESIC), bonuses, gratuity, and increments. It is always advisable to allocate a higher percentage to allowances, as properly named allowances can provide income tax benefits.
Regards,
Rahul Bagale
From Korea
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Dear Sandeep,
Generally, if you have a PF component that is 12% of the basic salary, then it is ideal to have 40% of the CTC as Basic. However, if the company is not enrolled for PF deduction for employees, then you can consider keeping a higher basic but not more than 50% of the CTC, keeping the legal and compliance angle in mind.
Best Regards,
Bhushan
From India, Mumbai
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Generally, if you have a PF component that is 12% of the basic salary, then it is ideal to have 40% of the CTC as Basic. However, if the company is not enrolled for PF deduction for employees, then you can consider keeping a higher basic but not more than 50% of the CTC, keeping the legal and compliance angle in mind.
Best Regards,
Bhushan
From India, Mumbai
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Dear Sandeep,
CTC design two ways:
1. CTC is known as gross salary.
2. Gross salary is known as CTC.
Now the thing is, in which way you are designing the CTC, in both cases, the basic component will differ. In the first case, it must be considered that 40% of CTC is the basic component. In the last case, it will be 45% of the gross salary as the basic component.
From India, Mumbai
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CTC design two ways:
1. CTC is known as gross salary.
2. Gross salary is known as CTC.
Now the thing is, in which way you are designing the CTC, in both cases, the basic component will differ. In the first case, it must be considered that 40% of CTC is the basic component. In the last case, it will be 45% of the gross salary as the basic component.
From India, Mumbai
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I don't know how people attain professional degrees without acquiring the required knowledge in the particular subject. Nothing harsh on anyone, however, my personal feeling is that people should receive a fairly comprehensive onboard training on the job to make them familiar with the crux, systems, policies, and procedures.
From India, Indore
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From India, Indore
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Hello Sujata,
First, understand that there are two ways of contributing towards EPF. One is the employee's contribution, and the other is the employer's contribution. Again, there are a few employees who fall under the mandatory contribution slab, and others fall under optional. Depending on your company policy, you can make it mandatory for all employees, taking into consideration that their net pay is not affected or their benefit towards enrolling in EPF. For example, an employee at the age of 56 who has never enrolled in EPF will not benefit if you try to enroll him at this age. So, study your employees' needs properly before making it mandatory for everyone.
Coming back to contributions, EPF is mandatory for those whose basic salary component is <=15000 per month. The employee's contribution is 12% of the basic salary. For example, if an employee draws a basic salary of 7000, Rs. 840 will be deducted from his gross pay towards EPF. Also, note that the ceiling limit for EPF calculation remains Rs. 15000 as basic pay. For better understanding, consider an employee whose basic pay is 20000 per month. If they have voluntarily opted for EPF, their EPF contribution will be calculated based on a basic pay of Rs. 15000, as this forms the ceiling amount. The deducted amount would be Rs. 1800 (which is 12% of 15000). Depending on the company policy, you can raise this ceiling to the actual basic pay of an employee, but it's not mandatory.
Now, for the employer's contribution:
The employer contributes 13.61% of the basic pay towards EPF. This 13.61% is divided as follows:
- 8.33% towards EPS (Employee Pension Scheme)
- 3.67% towards EPF (Employee Provident Fund)
- 1.10% for admin charges of PF
- 0.5% towards EDLIS (Employee Deposit Linked Insurance Scheme)
- 0.01% towards EDLI admin charges.
Thanks.
From India, Mumbai
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First, understand that there are two ways of contributing towards EPF. One is the employee's contribution, and the other is the employer's contribution. Again, there are a few employees who fall under the mandatory contribution slab, and others fall under optional. Depending on your company policy, you can make it mandatory for all employees, taking into consideration that their net pay is not affected or their benefit towards enrolling in EPF. For example, an employee at the age of 56 who has never enrolled in EPF will not benefit if you try to enroll him at this age. So, study your employees' needs properly before making it mandatory for everyone.
Coming back to contributions, EPF is mandatory for those whose basic salary component is <=15000 per month. The employee's contribution is 12% of the basic salary. For example, if an employee draws a basic salary of 7000, Rs. 840 will be deducted from his gross pay towards EPF. Also, note that the ceiling limit for EPF calculation remains Rs. 15000 as basic pay. For better understanding, consider an employee whose basic pay is 20000 per month. If they have voluntarily opted for EPF, their EPF contribution will be calculated based on a basic pay of Rs. 15000, as this forms the ceiling amount. The deducted amount would be Rs. 1800 (which is 12% of 15000). Depending on the company policy, you can raise this ceiling to the actual basic pay of an employee, but it's not mandatory.
Now, for the employer's contribution:
The employer contributes 13.61% of the basic pay towards EPF. This 13.61% is divided as follows:
- 8.33% towards EPS (Employee Pension Scheme)
- 3.67% towards EPF (Employee Provident Fund)
- 1.10% for admin charges of PF
- 0.5% towards EDLIS (Employee Deposit Linked Insurance Scheme)
- 0.01% towards EDLI admin charges.
Thanks.
From India, Mumbai
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ESI is mandatory for employees with gross pay less than or equal to Rs 15,000 per month. It is a two-way contribution. The employee contributes 1.75% of gross earnings per month, while the employer contributes 4.75% of the employee's gross earnings.
Regarding Professional Tax (PT) in Maharashtra:
- It's nil for gross earnings less than or equal to Rs 7,500 per month.
- Rs. 2,100 annually for gross earnings less than or equal to Rs 10,000, but more than Rs 7,500 per month (equivalent to Rs 175 per month).
- Rs. 2,500 annually for gross earnings exceeding Rs 10,000 (Rs. 200 per month and Rs. 300 in February).
Thank you.
From India, Mumbai
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Regarding Professional Tax (PT) in Maharashtra:
- It's nil for gross earnings less than or equal to Rs 7,500 per month.
- Rs. 2,100 annually for gross earnings less than or equal to Rs 10,000, but more than Rs 7,500 per month (equivalent to Rs 175 per month).
- Rs. 2,500 annually for gross earnings exceeding Rs 10,000 (Rs. 200 per month and Rs. 300 in February).
Thank you.
From India, Mumbai
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I am working as a sales coordinator for a six-month probation, and leaves are not allotted to me. Therefore, I am getting salary deductions by using my leaves from my basic pay amount. I just want to know if deducting salary from the basic pay is right or wrong?
From India, Mumbai
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From India, Mumbai
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Employee Benefits.doc
CTC SALARY SLIP FORM.xls