Support support image
Name is required.
Please enter valid Name.
Email ID is required.
Please enter valid Email.
Phone Number is required.
Please enter valid Phone Number.
Message is required.
Submit

Faster, easier and secure gateway to e-file income tax return

Heading Income Tax Clculator icon

Calculation of Gross Salary and CTC : Salary Calculator India

Salary is certainly the most important part of your career graph, as it tells the world about your job profile, growth, position and achievements in the firm you are working for. The salary is generally divided into three parts, that is, Basic Salary, Net Salary and Gross Salary.

Before we calculate your salary, let’s find out what the above-mentioned terms mean?

What Is Basic Salary?

Basic Salary of an individual is the salary amount that paid to an employee by an employer. It is the base income decided by the employer, depending on the designation and experience of the employee. The basic pay of an individual is calculated without adding bonuses, benefits, overtime, tax deductions and other compensations made to the salary of an employee. Basic pay is always taxed, if the basic pay is high then the tax liability will also be high.

How Can I Calculate Basic Salary?

Basic salary can be calculated as the salary, which an employee receives without adding bonuses, overtime payments. It can be calculated from the gross salary, it remains fixed and it does not increase even if the work time increases.

What is Gross Salary?

The various components that make up Gross Salary are as follows:

  • Basic Salary, pension, gratuity, overtime payment, ex gratia and cash rewards that are given by an employer based on the performance of an employee.
  • Allowances – House Rent Allowance (HRA), Medical, Leave Travel, Dearness Allowance (DA) and other such allowances.
  • Prerequisites – Rent for accommodation, electricity, water, and fuel.

How can I calculate my Gross Salary?

Gross Salary = Basic Salary + Allowances + Overtime Payments + Bonus + Perquisites.

What is Net Salary?

Net salary or take-home salary is the actual pay, that an employee receives after deducting taxes and other subtractions like, employee’s contribution to Provident Fund, pension scheme etc. It is the amount that is credited to the employee’s salary account.

Calculating Net Salary Manually

How can I calculate my take-home salary?

Your take-home salary can be calculated in the following manner: -

Net Salary = Basic Salary + Allowances (bonus, benefits) – Reductions/Deductions

Another way to calculate Net Salary is: -

Net salary = Gross salary- PF contributed by employee – ESI Contribution/ Income Tax – Professional taxes.

Net Salary

Gross salary = CTC- EPF- Gratuity

Taxable Income = Gross Salary- PF- Conveyance Allowance- LTA- HRA- Medical Bills- Medical insurance- Tax.

Income Tax- An individual must calculate his/her income tax by checking the income tax slabs and brackets.

Take Home Salary/ Net Salary = Gross Salary- Income Tax- PF- Professional Tax.

What is Cost to Company or CTC?

CTC or Cost to Company is the annual salary package which the company gives to an employee. It is basically the expenses a company makes on its employees including various components like House Rent Allowance, Provident Fund, Medical insurance, bonus and incentive as well as other allowances. CTC is based on various factors and that’s why it varies, which results in the variation of the net salary.

How can I calculate CTC?

There are various components that influence the calculation of CTC.

The various components are as follows:

CTC = Basic Salary + Allowances provided by the Company

How can I increase my Net Salary?

Employees can increase their net salary by making investments in several tax saving schemes like, PPF, Equity Linked Saving Scheme (ELSS) etc. The above-mentioned investments won’t increase an employee’s CTC, but it may increase his/her net salary. Under Section 80CCF you can also make an investment in Infrastructure bonds. You can also buy a house by taking housing loan and increase your net salary and last but not the least, you can increase your take home salary by keeping your basic pay low and increasing other tax-free allowances.

In the News

  • Now, file your tax returns with All India ITR mobile app

    Gadgets Now: Technology firms are gearing up to meet tax compliance deadlines with great fervour. All India ITR, an online tax compliance firm launched its e-filing app that works on both Android and iOS.

    14th June 2017

    Gadgets Now