How to Calculate Salary Using Basic Pay 50% Rule

Calculating salary using the Basic Pay 50% Rule involves ensuring that at least half of the total CTC is assigned to the basic salary component. This structure directly affects PF, gratuity, bonus, and other statutory calculations. HR teams use this method to create balanced salary breakups that meet legal standards while maintaining desired take-home pay. It also simplifies payroll processing and reduces discrepancies during audits. Understanding this calculation method helps businesses create sustainable compensation models that support both compliance and employee satisfaction.