Salary Calculator

Salary Calculator - Tool to Calculate Your Monthly in-hand Salary

Are you confused about your salary break-ups? Do you want to figure out the in-hand salary that you are going to receive when evaluating a job offer? There can be many such instances where you may want to calculate your gross salary and the amount that you actually take home but often these calculations are tedious and time-consuming and also require an expert in finance and taxation to accurately calculate the same. However, the scenario has changed and nowadays, with a in-hand salary calculator, you can figure out your in-hand salary, gross salary, and other break-ups of the CTC instantly.

What is CTC?

Often people get confused between in-hand salary and CTC. When a person joins an organisation, usually in the final rounds of the interview, the CTC is discussed but not the take-home salary. So, CTC is nothing but a Cost to the Company which includes all the direct and indirect benefits offered by your organisation along with the basic salary. In simple words, it is the cost that the organisation is incurring to have you as their employee. To understand this better, we will discuss the components of CTC in the next segment of the article.

Different Components of CTC

The Cost To Company is comprised of the following components –

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  Basic Salary The primary component of any CTC is the basic or base salary which comprises around 40% to 50% of the entire amount. This is the base figure on which other allowances are added and deductions are made.

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  Allowances If you are a government sector employee, then you will have a Dearness allowance while private sector employees get special allowances. These allowances are for covering expenses like education costs, internet and phone bills, petrol and other fuel costs, food and attire and others. These allowances are completely taxable allowances at the hand of the employees.

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  House Rent Allowance Another important component of your CTC is the House Rent Allowance or HRA. This is the monetary benefit received from the employer to cover the rental expenses of the employees. However, if the employee doesn’t live in a rented property, then taxes need to be paid as per the tax slab rate by the employee.

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  Bonus CTC also includes the bonus paid to the employees either for their performance or the yearly bonus. This is also taxable at the hands of the employees.

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  Leave Travel Allowance Employers also offer LTA which covers transport expenses of the employees and a certain number of family members. It can be by train, bus or airfare.

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  Gratuity If the employee serves a company for at least five years then the employer has to offer a Gratuity amount to that employee as per Gratuity regulations.

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  Employee Provident Fund Both employer and employee deposit 12% of the base salary in the EPF account. Now the employee’s 12% deposit is deducted from the basic salary and the employer pays 12% extra in the fund to pay the EPF to the employees.

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  Professional Tax This is a direct tax charged by the state and thus the rate differs from one state to another. However, as per the central government, the maximum value of the professional tax is capped at Rs. 2500 per year.

So, all these combined make the CTC of an employee. You can understand that it is going to be time taking to calculate the salary if you try to calculate all these components individually. Thus, taking the help of the take-home salary calculator India.

Calculation for Salary using Salary Calculator

To understand how salary is calculated using the CTC Calculator, let’s take an example. Suppose, your present CTC is Rs. 10 lakhs per annum. This CTC includes the following –

So, if you sum up all the above 5 figures, you will get a total CTC of Rs. 10 lakhs.

Now for the calculation of salary in-hand or the take-home salary, you need to consider the total PF contribution which will be deducted from the CTC, food coupons, and professional tax and also the income tax if the employer pays advance tax on the employees’ behalf.

So, total PF contribution would be = 12% of employers’ contribution + 12% of the employees’ contribution = Rs. 60000 + Rs. 60000 = Rs. 120000.

Therefore, the gross salary would be = Rs. (1000000 – 120000 -10000) = Rs. 870000 and from this the professional tax would be deducted as per the state government's prevailing professional tax rate. Even if we take the maximum amount which is Rs. 2500 in a year, then the net salary would be Rs. 867500. Now you need to divide this by 12 months to find out the per month take-home salary –
= Rs. 867500/12 = Rs. 72292.

Note: However, if there is an advanced tax then the calculation given below as per the tax regime will be applicable.

As you can see, these calculations are pretty rigorous and also you need to know a lot of taxation, and accounting things to accurately do these calculations, but with a take-home salary calculator you can find out these results within a few seconds just by entering a few details such as basic pay, bonus, special allowances and other variables.

Calculation of In-Hand Salary under the old as well as the new tax regime

Now to find out the exact take-home or in-hand salary, you need to deduct the tax that will be deducted from the salary. As there are two tax regimes one is the new one which is the default one at present and there is the old one, you need to choose one of these two. Here will see how in hand salary calculator will work under both circumstances.

So, the Monthly Take-home salary under this tax regime would be = Rs. (1000000 – 120000 – 10000- 2500- 52520)/12 = Rs. 67915.

Conclusion

As you can see in the above article, calculating the salary that you will be taking from the CTC given in your offer letter takes quite an amount of time and effort. However, with a salary calculator, you can do these calculations within a blink of an eye. It is easy to use, safe and accurate as well and you can use the take-home salary calculator for comparing different job offers as well.