What's max or min % basic can be of CTC?


Currently I am working in a company where the Basic is 25% of CTC. After 2 months I am going to join another company where Basic is 40% of CTC.

Moreover, in current company, with some limit on amount 1. Petrol Bills 2. Telephone / Internet Bills 3. Books Purchased, 4. etc are given Income Tax exemption.

But in new company it's not there.

Now even after getting a hike of 45% in CTC, I am seeing hike of not even 27% in in-hand salary. Majorly because the Basic component has changed drastically.

It has disappointed me a lot.

I would seriously like to know if there is some guidelines from IT Dept or Gov which says how much should be Basic component of the CTC. Also if there is some guidelines that suggest on various other components that can be treated as non taxable.

asked Apr 05 '12 at 21:30 by IT_Developer 1222

There is no as such rule/limit on how much percentage basic salary can contribute to total salary.

It all depends on employer policies and how employee friendly they are.

Usually in small companies (and startups), in order to attract better talent, employer tries to minimize income tax and thus provide a best possible package structure. Whereas a large employer may not want to take extra tension of collecting and managing bills for reimbursements etc. and thus keep package structure simple.

Read here to know some of the components employers may add in package structure: Tax exemption component for salaried employee

answered Apr 06 '12 at 10:56 by Pankaj Batra 5.2k320

@Pankaj Thanks for you response.
(Apr 08 '12 at 01:26) IT_Developer

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Asked: Apr 05 '12 at 21:30

Seen: 11,301 times

Last updated: Apr 08 '12 at 01:26