Tips and service: NSSO basis
Tip-based compensation requires specific payroll treatment. It does not exempt the employer from declarations and contributions.
NSSO 2026/3 instructions provide flat daily payments for workers compensated entirely or partially by tips or service in relevant functions. The flat rates were adjusted July 1, 2026. For exclusively tip-based compensation, multiply days by applicable flat rate then increase the basis by 8%.
For mixed compensation, compare the flat basis to sums and benefits owed by employer, increased by 8%, per page rules. Year-end bonus remains subject to ordinary contributions. Identify the exact function and its DmfA code; clarify to the candidate the fixed portion and service distribution method, without presenting tips as automatically exempt.