CTC Structure

is there any rule or law to designed a salary structure for an organization… if salary sturcture designed based on gross salary will it be correct? or it need to be designed only on CTC.
Suppose an organization wont have any salary structure and as per the mangement guidelines the slaries paid to employees were considered as gross salaries and salary sturcture was designed based on gross salary will it be corrrect …
what could be the percentages rules for each and every coponents in the salary structure please advice with law relations…

1 Like

Dear Subscriber,

At the outset, we need to be clear on definitions of CTC and Salary. Salary is the cash component and forms a part of CTC. Then, there are certain benefits paid by employer on behalf of employee such as PF, ESI, Gratuity, etc. Both these components form the CTC. Salary structures are generally derived by keeping CTC as the basis. For example: Basic pay is around 40% of CTC. Then other non-taxable allowances such as HRA, LTA, etc which are again carved out of the same CTC. The balance (residual amount) in the CTC will be paid as Special Allowance or Flexible Allowance. This forms the Gross salary. Hope this helps.
Regards, Vinod Gulvady.

2 Likes

Hi,

As long as you adhere with the Payment of Wages Rules, it will not be a concern whether you pay as CTC or as a Gross salary. Wage rules differ from states and type of industry, you can refer more about this here.

1 Like
Powered by | India's No.1 Payroll and HR Software.
9000+ Clients
150 Cities
10 Lakh+ Users