Basic Pay 50% Rule for Salary Structure in India

In India, the Basic Pay 50% Rule is widely used as a benchmark for designing salary structures that comply with statutory benefits and payroll regulations. It ensures that at least half of an employee’s salary is considered as basic pay, making PF, gratuity, and bonus calculations more accurate. This rule supports fair compensation practices and prevents misuse of allowances to lower statutory liabilities. HR professionals rely on this guideline to balance cost control with employee welfare. Understanding this rule is essential for payroll administrators, business owners, and employees alike.