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Salary Calculator

What is a Salary?

Salary is the regular payment made by an employer to his or her employees in exchange for the work performed by them. It is paid at fixed intervals, generally on a monthly basis, and often expressed as an annual sum. Salaries are usually determined by comparing what other employees in similar positions are earning in the same industry and region. In many countries, the supply and demand of resources play a major role in assessing the salary - how many vacancies are there for a specific position as against the number of people in the area who could fill that position.

Understanding Basic Salary

It is a fixed sum paid to employees in exchange for the work performed by them. The basic income is derived before any reductions or increases due to overtime or bonus, allowances are made. Basic salary is a fixed part of the compensation structure of an employee and forms the core of the salary of an employee. It does not vary, unlike the other aspects of Cost to Company. The entire amount of the basic salary shall be part of the in-hand salary.

Gross Salary - Definition

Gross salary is the term used to describe all the money an employee has made working for the company in a year. It is the salary which is without any deductions like income tax, PF, medical insurance etc. Gross salary is however, inclusive of bonuses, overtime pay, holiday pay, and other differentials. Some of the components of gross salary include basic salary, house rent allowance, special allowance and conveyance allowance, among others.

Difference Between Basic Salary and Gross Salary

Basic salary is the figure agreed upon between a company, its employee, without factoring in bonus, overtime, or any kind of extra compensation. Gross salary, on the other hand, includes overtime pay and bonuses, but does not consider taxes and other deductions. Say for instance, an employee’s gross salary is Rs. 40,000 and a basic salary is Rs. 20,000. This means that the individual will receive Rs. 20,000 as fixed pay and the remaining Rs. 20,000 in allowances such as house rent allowance, conveyance, dearness allowance, etc.

Cost to Company (CTC)

Cost to company is the amount that a company spends – directly or indirectly – in hiring and sustaining the services of an employee. In other words, CTC is a term for the total salary package of an employee. It indicates the cumulative amount of expenses an employer spends on an employee during one year.

The various components of CTC are as under:

Direct Benefits
Basic Salary
Conveyance Allowance
Dearness Allowance
House Rent Allowance (HRA)
Medical Allowance
Leave Travel Allowance (LTA)
Vehicle Allowance
Telephone/Mobile Phone Allowance
Incentives or bonuses
Special Allowance
Indirect Benefits
Food Coupons/Subsidized meals
Company Leased Accommodation
Interest Free Loans
Income Tax Savings
Health and Life Insurance premiums paid by employer
Savings Contribution
Gratuity
Superannuation Benefits
Employer Provident Fund (EPF)

Net Salary

Net salary, or more commonly referred to as take-home salary, is the income that an employee actually takes home after tax, provident fund and other such deductions are subtracted from it.

Net Salary = Gross Salary (less) Income Tax (less) Public Provident Fund (less) Professional Tax

Net Salary is usually lower than gross salary. It can be equal in cases where income tax is 0 and when the salary that the employee is earning is less than the government tax slab limits.

What is the Difference Between Gross Salary and Net Salary?

Gross Salary is the figure derived after totalling all the allowances and benefits but before deducting any tax, while net salary is the amount that an employee takes home. An individual's gross salary is inclusive of benefits such as HRA, conveyance allowance, medical allowance etc. Net Salary = Gross salary - All deductions like income tax, pension, professional tax, etc. Net salary is also referred to as Take Home Salary.

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Frequently Asked Questions

What is salary?

Salary is the regular payment made by an employer to his or her employees in exchange for the work performed by them. It is paid at fixed intervals, generally on a monthly basis, and often expressed as an annual sum. Salaries are determined usually by comparing what other employees in similar positions are earning in the same industry and region.

How TDS is calculated on salary?

Step 1 - Compute gross income

Step 2 - Add income from all other heads

Step 3 - Deduct loss from house property. The figure derived will be the employee’s total income on which tax is required to be deducted.

Step 4 - Assess the income tax as per the income based on slab rate along with the surcharge and cess as applicable.

Step 5 - Each month, 1/12th of the amount of tax shall be deducted.

Step 6 - Excess or deficit, if any, arising from any earlier deduction can be adjusted by increasing or decreasing the amount of subsequent deductions in the same financial year.

The income tax slab for individuals and HUF (less than 60 years old) for FY 2018-19

Income Tax Slabs Tax Rate Health and Education Cess
Income up to Rs. 2,50,000 No tax -
Income from Rs. 2,50,000 – Rs. 5,00,000 5% 4% of Income Tax
Income from Rs. 5,00,000 – Rs. 10,00,000 20% 4% of Income Tax
Income more than Rs. 10,00,000 30% 4% of Income Tax

The income tax slab for senior citizens (60 years old or more but less than 80 Years old) for FY 2018-19

Head 1 Head 2 Head 3
Income up to Rs. 3,00,000 No tax -
Income from Rs. 3,00,000 – Rs. 5,00,000 5% 4% of Income Tax
Income from Rs. 5,00,000 – Rs. 10,00,000 20% 4% of Income Tax
Income more than Rs. 10,00,000 30% 4% of Income Tax

The income tax slab for senior citizens (80 years old or more) for FY 2018-19

Tax Rate Health and Education Cess
Income up to Rs. 5,00,000 No tax -
Income from Rs. 5,00,000 – Rs. 10,00,000 20% 4% of Income Tax
Income more than Rs. 10,00,000 30% 4% of Income Tax

What percentage is HRA of basic salary?

HRA will be 50% of basic salary if the taxpayer is residing in a metro city and 40% of basic salary if the taxpayer is residing in a non-metro city.

What is gross salary?

Gross salary is the term used to describe all the money an employee has made working for the company. It is the salary which is without any deductions like income tax, PF, medical insurance etc. Gross salary is however, inclusive of bonuses, overtime pay, holiday pay, and other differentials. Some of the components of gross salary include Basic Salary, House rent allowance, Special Allowance and Conveyance Allowance, among others.

What is net salary?

Net salary, or more commonly referred to as take-home salary, is the income that an employee actually takes home after tax, provident fund and other such deductions are subtracted from it.

Net Salary = Gross Salary (less) Income Tax (less) Public Provident Fund (less) Professional Tax

What is cost to company?

Cost to company is the amount that a company spends – directly or indirectly – in hiring and sustaining the service of an employee. In other words, CTC is a term for the total salary package of an employee. It indicates the cumulative amount of expenses an employer spends on an employee during one year.

How is gross salary different from net salary?

Gross salary is the amount of salary after totalling all the benefits and allowances but before deducting any tax, while net salary is the amount that an employee takes home. An individual's gross salary is inclusive of benefits such as HRA, conveyance allowance, medical allowance, etc. Net Salary = Gross salary - All deductions like income tax, pension, professional tax, etc. Net salary is also referred to as Take Home Salary.

How is basic salary different from gross salary?

Basic salary is the figure agreed upon between a company its employee, without factoring in bonus, overtime, or any kind of extra compensation. Gross salary, on the other hand, includes overtime pay and bonuses, but does not consider taxes and other deductions. Say for instance, an employee’s gross salary is Rs. 40,000 and basic salary is Rs. 20,000. This means that the individual will receive Rs. 20,000 as fixed pay and the remaining Rs. 20,000 in allowances such as house rent allowance, conveyance, dearness allowance, etc.

How is basic salary different from gross salary?

Basic salary is the figure agreed upon between a company its employee, without factoring in bonus, overtime, or any kind of extra compensation. Gross salary, on the other hand, includes overtime pay and bonuses, but does not consider taxes and other deductions. Say for instance, an employee’s gross salary is Rs. 40,000 and basic salary is Rs. 20,000. This means that the individual will receive Rs. 20,000 as fixed pay and the remaining Rs. 20,000 in allowances such as house rent allowance, conveyance, dearness allowance, etc.

Read More About Tax

Tax

Understanding Tax
Capital Gains Tax on Shares
Challan 280
Claiming Interest on Home Loan And HRA
Custom Duty
Excise Duty
Direct Tax
Direct Versus Indirect Taxes
Insurance and Taxes
Advance Tax
Minimum Alternate Tax (MAT)
OLTAS
Sales Tax
Self Assessment Tax
Tax Calendar
TIN Number
Tax Planning

Income Tax

Income Tax
Income Declaration Scheme
Income from House Property
Income from Other Sources
Income Tax Calculator
Income Tax Department
Income Tax Features
Income Tax for Pensioners
Income Tax for Senior Citizens
Income Tax Refund
Income Tax Return
Income Tax Slab
How to pay Income Tax online
Payment of Tax through Credit Cards
E-Filing of Income Tax Returns
E-payment

Tax Forms

Form 10C
Form 12B
Form 15G
Form 15G and 15H
Form 16
Form 16 vs. 16A
FORM 16A
Form 16B
Form 24Q
Form 26AS
Form 26QB
Form 49B
Form 15h

Service tax

Service Tax
GST
GST Rates and Registration
GST Returns Filing
Service Tax Registration
Taxes Affected by GST
Service Tax Rate

Commercial Tax

Commercial Tax
Commercial Tax Gujarat
Commercial Tax Uttarakhand
West Bengal Commercial Tax

Tax Sections

Section 80C
Section 80C and 80U
Section 80D
Section 80DD
Section 87A
Section 80E
Section 43B
Section 44AD
Section 80CCD
Section 80EE

Road Tax

Road Tax
Road Tax in Bangalore
Road Tax in Madhya Pradesh

TDS

TDS
TDS on Salary
TDS Rates
TDS Refund

Property Tax

Property Tax
BBMP Property Tax
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Professional Tax

Professional Tax
Professional Tax in Maharashtra

Salary

Gross Salary
Salary Structure
Conveyance Allowance
Dearness Allowance
Gratuity
HRA
HRA Calculation
What is EPF?
PF Withdrawal
Salary calculator

Others

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