As mentioned above, the basic pay is the minimum sum of earnings that an employee is to receive. The individual may receive additional money by earning incentive bonuses or working overtime. The extra earnings made from logging in overtime does not raise the employee’s basic salary. Similarly, the monetary incentive paid out by the employer throughout the year does not impact the basic salary. Basic salary will usually be less than the gross salary.
On the other hand, gross pay includes not just the employee’s base pay, but also any additional earnings. Say, if an employee puts in extra hours or is the recipient of an incentive bonus, the additional earnings shall appear in the individual’s gross pay. It must be noted that gross salary does not include any deductions made. It is the salary paid after totalling all benefits and allowances, but before making deductions like employee provident fund (EPF) and taxes.
To sum it up, gross salary is made up of the following:
Basic Salary
Contribution to Pension/Provident fund, Group Life, etc.
House Rent Allowance, Travel Allowance, Children Education Allowance and other similar allowances
Overtime and Bonus
