Basic Salary

What is a Basic Salary?

The Basic Salary is the sum agreed upon by both parties to be paid to the employee. It is decided upon at the start of the job. Since it is determined before the job actually starts, it does not include any deductions or bonus amounts that are appointed according to the employee’s dedication. It is not the same as take-home pay or the gross salary. As the name implies, it is the foundation of the wage structure of the employee. The wage structure includes major components like EPF, ESIC, and Gratuity depending on it.

The Basic Salary is determined by the applicant’s abilities, the position for which he/she is applying, and negotiation terms between the parties. The Basic Salary is not susceptible to change, it stays the same. However, in gratitude for his service over the years, a corporation may grant an annual raise or a bonus to an employee’s base pay. A rise in basic pay is generally accompanied by promotion at work or an appraisal for their efforts.

Also See: CTC | Gross Salary | Fixed Pay