What is Basic Salary?
Basic salary, or basic pay, is the fixed core part of an employee's pay before allowances. Under the Labour Codes, basic pay, dearness allowance and retaining allowance form "wages", with allowances above 50% of total remuneration added back. PF and gratuity are calculated on that wage base.
Example
If total monthly pay is Rs 1,00,000 and basic pay is only Rs 30,000, the 50% rule can raise the wage base for statutory items to Rs 50,000. If basic pay is Rs 60,000, it stays at Rs 60,000.
Related
Read the 50% wage rule and CTC.
Related terms and guides
Sources
- Ministry of Labour and Employment, FAQs on Labour Codes (Dec 2025), https://www.labour.gov.in/static/uploads/2026/01/de4758d5bfeffc456d7de97a801891b0.pdf, live official page, linked for readers; link checked 2026-10-31
- Ministry of Labour and Employment, Compliance Handbook for Employers under the Four Labour Codes, https://www.labour.gov.in/static/uploads/2026/02/83978455025732b99b0165def80ab171.pdf, live official page, linked for readers; link checked 2026-10-31
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.