Every salaried employee should know about what is basic salary, what is gross salary and what is the difference between basic salary vs gross salary, and how much basic salary are you getting and how to calculate basic salary. Here you can find complete details about basic salary calculation formula in Excel.
What is Basic Salary
Basic salary is a part of the total salary which doesn’t include any other allowances. All the other allowances along with basic salary will be known as gross salary. So the basic salary is a base part of the total salary.
The basic salary percentage varies from one company to another company. But mostly the base pay of an employee should be equal or more than the minimum wage fixed by the state government. Some companies will follow the minimum wage rule to fix the basic salary.
For example, if the minimum wage for skilled labor is 13000 in a state then the basic salary for skilled labor in that particular state should be 13000 or above 13000 Rs. Keeping this in a view employers need to fix the minimum wage.
There is no particular basic salary calculation formula, but we can calculate it if we know the gross salary and basic pay percentage fixed by the employer.
What is Gross Salary
Gross salary is aggregate of the total amount of pay that an employee will get in every month, it includes all the allowances including basic pay. The simple definition of gross salary is basic salary plus allowances like dearness allowances, house rent allowances, medical allowances, conveyance allowances, and special allowances, etc.
Basic Salary Calculation Formula in Excel
- Most of the companies will fix the basic salary between 40-60% of gross salary. (But remember after calculating the amount, the basic pay should be more than minimum wages fixed by your state govt if you get less amount then increase the percentage).
- In order to prepare basic salary calculation formula in Excel, we need to know the gross salary and basic salary percentage fixed by the company.
- For example, if the gross salary of an employee is 45000 Rs and basic salary percentage fixed by the company is 40% then the basic salary will be:
Basic salary = 40% of gross salary = 45000 X (40/100) = 18000 Rs
Basic Salary Calculation By Using EPF contribution
- We can calculate the basic salary of an employee if we know the PF contribution. But this will be applicable to employees whose monthly basic pay is below 15000 Rs. Because up to 15000 Rs basic pay PF is mandatory.
- As we know every employee whose monthly basic salary is below 15000 Rs should need to pay 12% of their basic salary towards employee provident fund. So if we know the PF contribution then we can calculate the basic salary.
- For example, if 12000 Rs was deducted from the salary of an employee towards employee provident fund, then his basic salary will be calculated as follows
For 15000 Rs basic salary PF contribution = 15000 X 12% = 1800 Rs
i.e for 1800 PF deduction basic salary = 15000
So for 1200 PF deduction basic salary =?
Formula = (1200/1800) X 15000 = 10000 Rs.
Also read: How to calculate PF and ESI with example
Basic salary calculation from CTC
If you are looking to know about how to calculate basic salary from CTC then you can follow the above steps. Because in your CTC you can know how much PF deduction you have. Based on that PF deduction you can calculate your basic salary from CTC. If your basic is more than 15000 Rs and you don’t have PF deduction then you have to calculate your base pay based on your gross salary.