Rules for fixing Basic Salary

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This query is : Resolved

Naveen Kumar (Querist)

13 January 2009 Dear All

I am presently working in an Australian MNC company. The Company has fixed same basic salary for all the employees ie.some employees are getting Gross salary of Rs. 15000/- and some employees are drawing salary of Rs.50000/- or more. But the company has fixed basic salary of Rs. 6500/- for all the employees.

Please let me know is there any hard and fast rules for fixing basic salary for calculating TDS on salary. Because i have calculated TDS on salary of all employees fixing Rs. 6500/- as basic and others as allowances. If there is any legislative problem in this kind of salary structure then plz let me know.

Thanks & Regards
Naveen Sharma

K V Subba Rao

K V Subba Rao (Expert)

13 January 2009 TDS has to be affected taking into consideration, inter alia, all components of salary (subject to prescribed conditions for respective items) and not Basic alone.

There is nothing wrong in fixing Basic for all at uniform level of Rs 6500.This might have been done keeping in view maximum salary for Employer's contribution to Provident Fund.

However, even if Basic is fixed at different levels for individual employees or fixed at a higher level uniformly for all employees, it doesn't make any difference as far as PF Contribution or TDS aspects are concered

O.D.SHARMA

O.D.SHARMA (Expert)

14 January 2009 Dear,There is no basic rule to have structure of salary but it depends.if basic is common then other perks are different.Tax have nothing to do with only basic . all components of salary to be considerd for taxation.

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