Basic Salary
Definition
The fixed core component of an employee's pay, before allowances and bonuses. Many statutory calculations — provident fund, gratuity and others — are based on basic salary, so its proportion of the package matters.
Related Terms in Payroll
Cost to Company (CTC)
The total annual cost an employer bears for an employee in India, including salary, allowances, employer contributions and benefits. It is larger than take-home pay because it includes costs the employee never receives in cash.
Dearness Allowance (DA)
A cost-of-living adjustment paid to employees, chiefly in the Indian public sector, calculated as a percentage of basic pay and revised periodically to offset inflation.
Leave Travel Allowance (LTA)
An allowance Indian employers pay to cover an employee's travel costs within the country, which can be exempt from tax subject to conditions and limits under the old tax regime.
Form 12BB
A declaration an Indian employee gives their employer of the deductions and allowances they intend to claim — such as HRA, LTA and investments — so the employer can compute TDS on salary correctly.
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