Glossary
Basic pay
The fixed core-salary component of CTC that, with dearness and retaining allowance, forms the statutory "wages" base under Code on Wages §2(y) — before any deemed-wages add-back.
Basic pay is the anchor figure most other CTC components (HRA, PF contribution, gratuity in the old regime) were traditionally calculated as a percentage of. It is one of only three components that count as wages by default.
Under the new deemed-wages rule, a low basic-pay percentage no longer keeps statutory liabilities low. If total exclusions exceed 50% of CTC, the gap gets deemed back into wages regardless of what basic pay says.
Why it matters now: structuring basic pay low to save on statutory costs, a common pre-2025 practice, stopped working the moment the deeming rule took effect.