salary structure

The allowance only covers railway ticket prices and airfares. Section 10 of the Income Tax Act, 1961 offers tax exemption on the LTA amount for up to two holidays in a four-calendar-year block. You need to submit proof of travel to receive the tax benefit. The current rate of transport allowance for Central Government employees is Rs.1350 (Plus 38% of 1350) for TPTA cities and Rs.900 (Plus 35% of 900) for Other Places. Effective starting July 1, 2021, Central Government employees will receive updated House Rent Allowance rates in A, B, and C-class cities.


Their take-home pay includes it, and it is taxable as income. Most of the time, employers make sure that the base salary doesn’t make up more than 40% of the overall CTC. The gratuity is an employee benefit payable when you either retire from the company or quit after 5 years of service.

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Take-Home Pay Calculator

Thereafter, you need to deduct the yearly professional tax from the gross salary. For this example, we will assume it is ₹2,500 in your location. The salary has many components that may vary among different employers. Below is a list of the most common breakdown of the salary structure. Use this calculator to find your take home salary (usually called in-hand salary in India) after deducting income taxes, before making a decision to join the new job. It is a cash bonus that the employer gives to his\her staff in exchange for services rendered.

This allowance gives you a tax benefit on travel expenses incurred by you, while on leave. Simply because not all CTC components are equally taxable or payable every month. Your Take Home Salary is the amount that you will get in your bank account after taxes and all other deductions like Provident Fund, Profession tax, etc. You can get an estimate of the monthly take home salary from CTC once you enter all the details. A gratuity is a one-time payment made to an employee following a predetermined length of service.

Bonus is an additional payment linked with the employee’s performance. It is fully taxable to the employees, and it is generally received at the end of the year. As the name suggests, Leave Travel Allowance is a benefit given to employees to cover travel expenses while they are on leave. It covers the train or bus fares or airfares incurred on travelling with or without family.

India Finance Calculators

If you are earning a bonus payment one month, enter the £ value of the bonus into the bonus box for a side-by-side comparison of a normal month and a bonus month. All the mandatory deductions and other deductions if any are to be entered in this Deductions in Central Govt Employees in hand Salary Calculator to know the exact take home pay. As an employer, it is your job to take prospective employees through every entry in their salary matrix and make sure they are clear and agreed upon. The biggest drawback about the CTC structure is that it includes many deductibles that form a part of the overall salary but do not come into the employee’s hands. While the gross figure at the end of the calculation matrix may look a lot like what your employee dreams of, the actual figure you get in hand is far from it. In 2020 salaried employees earned the following hourly rates.

Depending on your title, experience, and the sector you work in, it ranges from 35 to 50 % of your whole compensation. For example, if your current salary is ₹50,000 and your new salary after the increase is ₹55,000, the difference is ₹5,000. To calculate the percentage increase, divide ₹5,000 by ₹50,000 and multiply by 100 to get 10%. Every employee who earns a particular amount in compensation is required to pay this tax to the state government.

This gives you clarity on your salary breakup and helps you gain clear understanding of your salary components. Before we can calculate the Net Salary, we should first determine the Gross salary. Gross Salary is obtained by subtracting the Employer’s contribution Provident Fund contribution and Gratuity from Cost to Company. Please note that we are a facilitating platform enabling access to reliable professionals. We are not a law firm and do not provide legal services ourselves.

If these exclusions cross 50% of the total remuneration, they will be added to the “wages” component. Read on to find out more about the new wage code and its impact on your take-home pay. This website is using a security service to protect itself from online attacks. The action you just performed triggered the security solution. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data.

What are the components of the salary structure?

But with the new budget announced on February 2, 2020, taxpayers can now choose between the current and new tax regime. Travel cost can be claimed for tax exemption under Section 10, twice in a block of four years. LTA covers only domestic travel, and the amount is provided on submission of actual bills. In Budget 2019, a standard deduction of Rs 50,000 has been introduced.

  • Our mission is to help you plan your finances effectively.
  • “in-hand” is a word used in daily life to mean the final amount received after the deduction of taxes.
  • Receive information of your transactions directly from Exchange on your mobile/email at the end of the day.
  • You must remember one point that this is a voluntary plan, and there is no compulsion that each company has to contribute an equal amount to the EPF.
  • Uncommon.It is important to make the distinction between bi-weekly and semi-monthly, even though they may seem similar at first glance.

The overall amount calculate take home pay india to the employee after all deductions such as provident fund and taxes have been deducted. However, there is a chance that it is equal when the income tax is zero or if the amount payable to the employee is lesser than the mentioned government tax slabs. An employee’s gross salary would include benefits such as conveyance allowance, medical allowance, house rent allowance, etc. Your gross salary is your pay before any deductions are made.

Nowadays, companies usually give you the flexibility to choose your CTC structure by keeping only the Basic Salary, Provident Fund and Variable Portion mandatory. You should at least get a rough idea of what is the Employer’s practice of paying variable compensation. You can search for this information online on websites like Glassdoor etc. If your joining date is near the end of the appraisal cycle (say 2- 3 months before), most probably you will not be eligible for immediate appraisal. However, what you see in your CTC offer letter is only the employer’s contribution.

How to calculate monthly take-home salary?

Defmacro is only acting as a technology facilitator for the ERI services wherein the role of Defmacro is limited to the extent of providing the platform to the user. Any transaction in respect of ERI Services is strictly a bilateral transaction between Clearsharp and the user. You can see it in Form 16, Form 16 is issued by the company, it contains details such as; salary earned by the employee and the amount of tax deducted. You can also see it in Form 26AS on the Incometax website. It calculates the basic salary as a percentage of the CTC. You can always cross-check the take home salary with your HR or finance manager in the organization and ask them to explain the details about the deductions and allowances.

pay level

App for more information related to salary and income tax. E.g. If your Gross Taxable income is 6.5 lakh rupees and you take full 80C deduction of 1.5 lakh rupees, you will have to pay no tax as Net Taxable income does not exceed 5 lakh rupees. The tax slab that you fall in after considering your exemptions / deductions has a big impact on your tax liability.

Leave Travel Allowance (LTA)

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