: In this article, we will discuss the benefits of Gross Pay & Take Home Salary Calculator. Read on to learn more!
Every professional employee receives a fixed amount of money at the end of each month as payment for their labor (don’t you eagerly anticipate this day each month?) This is known as a salary. Usually, your offer letter will include information on your salary, and your payslip will also include this information. Here are a few salary-related terminologies you should be familiar with before we begin:
CTC
Your complete salary package, which includes all benefits that the company has paid for without deducting any taxes, is known as your CTC (Cost to Company).
Gross Salary
Gross salary is your salary that is before any deductions are made from it. Your gross salary includes your basic salary, house rent allowance (HRA), provident fund, leave travel allowance (LTA), medical allowance, professional tax, etc. Simply put,
Gross salary = CTC − Bonus
Gratuity
The compensation your employer gives you in exchange for your services is known as a gratuity. You must have served at least five years in an organisation in order to be eligible to collect gratuity. If an employee passes away or becomes handicapped due to an accident or disease, gratuity may be paid before the five-year mark.
Use Vakilsearch’s take home salary calculator to calculate your in-hand salary. The salary breakup calculator will help determine your exact take home salary.
Components of your salary
Basic salary
It represents the base pay you receive. Depending on your position, level of experience, and the sector of the economy you operate in, it might range from 35 to 50% of your total gross income. The base pay has no tax deductions.
House Rent Allowance (HRA)
This is the reimbursement for costs associated with renting housing. It is a fully taxable portion of your income if you don’t live in a rental home.
Leave Travel Allowance (LTA)
This is a reimbursement offered by your employer for domestic travel while you are on vacation and is not taxable under the Income Tax Act of 1961.
Special Allowance
It’s a fixed sum of money offered above and beyond your base pay in exchange for fulfilling certain criteria; it differs between firms. Your salary includes a fully taxable benefit.
Bonus
It is a company-provided performance-based incentive that is fully taxable as a component of your gross pay.
Employee contribution to the provident fund (EPF)
Each month, 12% of your basic income is contributed to the EPF by both you and your employer (Employee Provident Fund). You can deduct your contribution to the EPF according to Section 80C of the Income Tax Act of 1961.
Professional tax
The maximum annual amount due under this direct tax to the state government is 2,500.
The breakdown of your salary’s components that was just provided, we hope, provided you with enough knowledge to begin going.
Given all the many factors, figuring out your in-hand salary can be extremely difficult. You are not the only one who may still be confused. To get over this difficulty, many people in India use salary calculators.
Salary Calculation Formula
To calculate each component of your wage, which has several components, you need a different formula. The main calculations you need to understand are:
- Gross salary: CTC – EPF – Gratuity
- Gratuity: (Basic salary + DA) × 15/26 × Number of years of service in the company
- Taxable income: Gross Salary – EPF/PPF Contributions – Tax-free Allowance – HRA – LTA – Health Insurance – Tax-saving Investment – Other Deductions
- Take-home Salary (Net Salary Post Taxes): Gross Salary – Income Tax – EPF Contribution – Professional Tax
To keep things simple, use the Gross Pay & Take Home Salary Calculator that is available on the internet.
What is a Salary Calculator?
Your take-home pay is determined by a simulation called the Gross Pay & Take Home Salary Calculator. It is the employee’s final take-home pay after all necessary deductions.
The Cost To Company (CTC) and the bonus included in the CTC are included in the formula box of the Salary calculator.
The salary calculator will provide your take-home pay as well as deductions for professional taxes, employee insurance, employer and employee provident funds, and more.
How do Salary Calculators Work
You must enter the Cost To Company (CTC) and the bonus, if applicable, as a set amount or a percentage of the CTC in order to determine the take-home salary.
Your Cost To Company (CTC), for example, is Rs. 8 lakh. Your employer awards you a 50,000 rupee bonus for the fiscal year. When subtracting 50,000 from 8,00,000, your total gross salary is 7,50,000. (the bonus is deducted from the CTC).
Gross Salary = ₹ 8,00,000 – ₹ 50,000 = ₹ 7,50,000.
The professional tax of Rs. 2,400 per year is subtracted from the gross salary (this is the professional tax in Karnataka). It then subtracts the employee’s and employer’s contributions to the Employee Provident Fund (EPF)
EPF contributions are calculated based on a monthly salary limit of Rs 15,000 maximum. It equals 12% of Rs. 15,000, which works out to Rs. 1,800 per month or Rs. 21,600 annually.
Therefore, you have an employee contribution to the EPF of Rs. 21,600 per year and an employer contribution to the EPF of Rs. 21,600 (8.33% of the employer’s payment is diverted to the employee pension system).
In addition, you also have a yearly deduction of ₹ 3,000 towards employee insurance.
Total Deductions = Professional Tax + EPF (Employee Contributions) + EPF (Employer Contributions) + Employee Insurance.
Total Deductions = ₹ 2,400 + ₹ 21,600 + ₹ 21,600 + ₹ 3,000 = ₹ 48,600.
Take Home Salary = Gross Pay – Total Deduction
Take Home Salary = ₹ 7,50,000 – ₹ 48,600 = ₹ 7,01,400.
How to use the Salary Calculator
The Gross Pay & Take Home Salary Calculator displays your take-home pay in a matter of seconds.
To use the salary calculator:
- firstly Enter the yearly cost to company or the CTC.
- Enter the bonus that is included in the CTC as a percentage or amount.
- The Salary Calculator will show you the performance bonus & the total gross pay.
- It will then display the professional tax, employer PF, employee PF, employee insurance, & take-home salary.
Benefits of using the Salary Calculator
Your take-home salary will be calculated quickly using the salary calculator.
- If you receive a bonus, the calculator displays how your salary structure will change. You become familiar with the advantages of a new remuneration plan.
- The Salary Calculator shows you the various components of your salary.
- You learn how much you and your company are contributing to your employee provident fund.
Conclusion
We hope with the information provided above, one has understood the benefits of using salary calculators. There are many Gross Pay & Take Home Salary Calculator available in India. However, Vakilsearch is the go to take home salary calculator in India to the enjoy quick and accurate results.
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