BASIC SALARY-new rule

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A new rule under the Labour Code mandates that employee allowances cannot exceed 50% of the total Cost to Company (CTC). This means an employee's basic salary must constitute at least 50% of their gross salary. Previously, there was confusion about whether basic salary itself was capped, but the clarification confirms it's the allowances that are limited.

Ritu

Ritu (Querist)

04 August 2021 Sir/Madam,
Is there any rule that the basic salary would be 50% only (and not more than that) of gross salary , if gross salary reached at certain limit???????????????

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

04 August 2021 It's only allowances caped at 50% and not to the basic salary.
The most prominent rule under the new Labour Code is the mandate to cap employee salary allowances at 50 per cent of CTC (cost-to-company). This means the basic salary of an employee has to be at least 50 per cent of CTC

Ritu

Ritu (Querist)

04 September 2021 Ok Sir.....Thank you so much for your reply.

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