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Dear Mr. Srinivas
Basic salary can not be zero. Basic is aprrox 43% of gross , although there is no fixed rule to it. You also need to keep in mind that other calculations (PF contribution, leave encashment, payment of gratuity etc) are all calculated from the basic salary, so if it too high, the outflow for the company will increase.
Your basic wages (in the absence of DA) should be more than the minimum wages payable to the employee as per the minimum wages act. (This is laid out by the respective state government and it is industry-specific).
Whatever allowances that you give other than the basic should go with a purpose (eg. HRA for house rent allowance , conveyance for commuting, medical for health, etc.)
Please remember that you cannot have an exhorbitant amount as "special allowance" because you will be questioned by the Provident Fund commissioner that you are trying to evade PF contributions.
If you go through the above norms, you will be some where in the range of 40% of gross as basic salary which can be managed.
Note that no one will question you if 100% of gross is basic but if it is lesser than 35% , you will be definitely questioned by these labour boards.
Hope this is sufficient
Thanks
SHIV SHARMA
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