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HR TERMS, EXPLAINED

Basic Salary

The fixed core of an employee’s pay, before HRA, allowances or bonuses are added. PF and gratuity are worked out from it.

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Basic Salary

In simple words: Basic salary is the fixed core of someone’s pay, before any extras like HRA, allowances or bonuses are added. Think of it as the foundation, and everything else is built on top of it.

Example: Riya’s monthly pay is ₹40,000. Her basic is ₹16,000, and the remaining ₹24,000 is split into HRA, allowances and other parts.

Why it matters: Many other things are worked out from basic, such as PF contributions and gratuity. A higher basic usually means a bigger PF and a bigger gratuity, but a smaller take-home. That’s why this one number affects both the company and the employee.

See also: Payroll & Salary Rules

Definitions are general guidance. Your organisation's policies and applicable local requirements determine how a term is used in practice.

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