Basic salary calculation is completely based on HR policy in India. Basic salary is the core income of an employee. Basic salary is the amount paid to employees before any increases due to overtime or bonus, allowances like internet usage for those who work from home or communication allowance or reductions. Basic salary is an unchanging amount paid to employees by their employers in return for the work performance of proficient duties by the former. Basic salary, therefore, does not include benefits, bonuses or any other payment from employers. As the name itself suggests, basic salary is the base of the salary of an employee. It is a fixed portion of the payment structure of an employee and usually depends on his or her designation. If the recruitment of an employee is made on a pay scale, the basic salary may be increased every year. Or else it remains fixed.
Salary calculation is done according to the rate of pay agreed upon by an employer and employee and does not include any extra compensation or overtime. Basic salary formula is used to calculate other elements of the salary. Several elements of a salary package may be computed based on the basic salary on the basis of the position of an employee within a company’s salary structure. It is important to notice that the amount of cash that an employee earns working extra time does not, in any way, raise her or his basic pay amount. If an employee receives an incentive amount in a year, it will not raise her or his basic salary. The basic pay, therefore, remains unchanged, unless an employee discusses with his or her employer. Basic salary is either 50% or 60% of the Gross salary and depends if you want to flee from PF liability
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