Basic Salary Calculator
Updated August 2026 · Free · No sign-up
Calculate basic salary from CTC or gross — the component everything else in Indian payroll hangs off: PF, gratuity, HRA, leave encashment, and statutory bonus all compute on basic.
Quick answer: Basic salary is typically 40-50% of CTC (or ~50% of gross). On a ₹10 LPA CTC at 40%, basic = ₹4,00,000/year (₹33,333/month) — and that number drives PF (12%), gratuity (4.81%), and HRA (usually 40-50% of basic).
Why Basic Is the Keystone Component
Every statutory and most contractual benefits key off basic (often basic + DA):
| Computed on basic | Rate |
|---|---|
| EPF contribution | 12% employee + 12% employer (on basic + DA) |
| Gratuity | 15/26 × last basic+DA × years (≈4.81%/yr provision) |
| HRA component | Usually 40-50% of basic — caps the HRA exemption |
| Leave encashment | Per-day basic (+DA) × unused days at most companies |
| Statutory bonus | 8.33-20% of basic (within eligibility ceilings) |
| Overtime (Factories Act) | 2× ordinary rate derived from basic+DA |
Worked Example — ₹10 LPA CTC at 40%
Basic = ₹4,00,000 (₹33,333/month). Derived: employee PF ₹48,000/yr, employer PF ₹48,000/yr, gratuity provision ₹19,240/yr, HRA component ₹2,00,000 (at 50%). Special allowance absorbs whatever remains after these blocks — it's the balancing figure, not a real benefit.
High Basic vs Low Basic: The Trade
- High basic (50%+): more PF savings and gratuity, bigger HRA exemption headroom, higher encashment value — but lower monthly cash and more locked money.
- Low basic (30-35%): maximum monthly cash — but thin retirement accumulation, small gratuity, capped HRA exemption, and weaker FnF components at exit.
- The wage-code question: India's pending labour codes push toward basic ≥ 50% of total pay, which would raise PF/gratuity across the board — structures are drifting that way already.
Basic vs Gross vs CTC vs Net (One Table)
| Term | Meaning |
|---|---|
| Basic | The core component — benefits math runs on it |
| Gross | Basic + HRA + allowances (before deductions) |
| CTC | Gross + employer PF + gratuity + variable + perks accounting |
| Net / in-hand | Gross − PF − professional tax − TDS (in-hand calculator) |
Reading Your Offer Letter's Structure
- Find basic as % of CTC — 40-50% is standard; below 35% flags a cash-optimized/benefit-thin structure.
- Check whether DA exists (mostly government/PSU) — statutory formulas use basic+DA.
- Verify HRA = 40-50% of basic if you pay rent — less HRA than rent context wastes exemption capacity.
- Treat "special allowance" as the balancing figure it is — fully taxable, no statutory leverage.
- Model two structures side by side before negotiating: same CTC, different basic %, changes monthly cash by thousands.
For Employers
Uniform basic-percentage policies (one rate for all grades) survive audits and wage-code transitions better than bespoke per-offer structures. Budget the full loading: each ₹100 of basic carries ~₹12 employer PF + ~₹4.81 gratuity accrual on top.
Frequently Asked Questions
What percentage of CTC is basic salary?
Typically 40-50% of CTC (or ~50% of gross). The pending Indian wage codes push toward basic being at least 50% of total pay.
How do I calculate basic salary from CTC?
Basic = CTC × basic percentage (per your structure). ₹10 LPA at 40% = ₹4,00,000/year, ₹33,333/month.
What is calculated on basic salary?
PF (12% both sides), gratuity (15/26 formula), HRA component and exemption caps, leave encashment, statutory bonus, and Factories Act overtime.
Is higher basic salary better?
For savings and exit benefits, yes (more PF, gratuity, encashment); for monthly cash flow, no. 40-50% balances both for most people.
What is special allowance?
The balancing figure after basic, HRA, and fixed allowances — fully taxable with no statutory benefits attached to it.
What is DA (dearness allowance)?
An inflation-linked component mainly in government/PSU pay; statutory formulas (PF, gratuity, OT) run on basic + DA where it exists.
✓ Formula verified • Last updated: August 20, 2026