Basic salary refers to the amount of money that an employee receives prior to any extras being added or payments deducted. It excludes bonuses, overtime pay or any other potential compensation from an employer. The whole amount of basic salary is part of the take-home salary. Basic salary is fully taxable.
Basic salary forms the core of the salary structure, constituting 40-45% of the total CTC. Other salary components like Gratuity, Provident Fund and ESIC are determined according to the basic salary. The designation of the employee as well as the industry in which he or she is in, are some of the components factored in while assessing the basic salary.