The core fixed component of a salary structure, typically 40–50% of CTC, that most statutory calculations are based on.
Basic Salary is the fixed core of an employee's pay, before allowances and variable components are added on top. Most organisations set it at roughly 40–50% of total fixed pay or CTC, though there's no legal requirement fixing this percentage — it's a matter of each company's compensation policy.
Basic Salary matters beyond its own value because several statutory calculations are pegged to it — EPF contributions (12% of Basic), gratuity, and HRA exemption limits are all calculated as a percentage of Basic Salary. A lower Basic Salary reduces these statutory deductions but can also reduce long-term retirement savings and HRA tax benefits.
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