How can I calculate my take home salary in India?

In any official set up, an employer pays the employees a pre determined amount towards their services , at the end of the month. This payment is known as salary or pay. This amount is generally stated in the appointment letter or contract and mentioned in the payslips of the employee accordingly.

The pay or salary has various components and each of these can vary across different employers. Salary or pay forms part of an employee’s annual income and therefore they are liable to pay taxes towards it. Hence, the amount which an employer pays to the employee in gross is different from what the employee actually gets in hand or takes home at the end of the month.

Here, we are going discuss about the take-home salary and how a take home salary calculator can help the employees in determining the salary which the employee will actually get in hand. For that first of all we need to understand the different components of the salary.

Understanding the various components of the salary

Following are some of the components of salary which an employee should know about:

The Basic Pay/Salary

The basic pay forms a part of the Cost to Company (CTC) paid to the employees by the employers towards the services rendered by the employees. It is generally around 40 to 50% of the employee’s gross salary depending on the different industry or sectors, employee rank etc.

The House rent allowance or HRA

This is paid by the company to the employees who live in a rented place. It is usually 50% of the basic salary for those living in the metro cities. For the employees who reside in the non-metro cities, the amount is 40% of the basic salary. The HRA is partially or fully tax-exempt, as per the Section 10(13A) of the Income Tax Act. For those employees who don’t stay in a rented place, the HRA will be fully taxable.

Special allowances

Special allowances are a fixed component paid over and above the basic salary and varies across different companies.

Bonus

A bonus forms a part of an employee’s gross salary and is usually offered as a reward to the employee.

Leave travel allowance or LTA

This LTA is paid to cover the employee’s and her/his family’s domestic travel expenses for a vacation or holiday. This allowance usually covers the train ticket expenses or the airfares. Tax exemption can be availed on the total LTA amount for a maximum of 2 holidays or vacations in 4 calendar years, as per the Income-tax Act.

The Employee Provident Fund or EPF

The EPF is a mandatory savings scheme which must be provided by all the companies of a certain size. It is 12% of an employee’s basic pay and is deposited in the EPF account. The employer also does an equal contribution to the employee’s EPF account. However, the employee’s contribution is tax deductible for a maximum of Rs.1.5 lakhs per annum. But, the employer’s contribution is considered as part of the CTC and is not displayed on the pay slip.

The above-mentioned salary components may seem to be complicated to many employees and the take home pay calculation can be even trickier since it involves various aspects. Therefore, to save an employee’s time and efforts, Reviewia has designed a take home salary calculator.

Reviwia’s take home salary calculator is an online tool which helps an employee estimate her/his net take home pay post the tax deduction. It takes into account all the different salary components and the tax deductions applicable.

Conclusion: As the salary calculations are quite tedious, so most of the people in India prefer the online take home salary calculators. Reviewia’s take-home salary calculator is an absolutely free tool which can be accessed anytime and from anywhere. It provides all the required data on salary within seconds and with total accuracy. However, while using the calculator, the users need to be very careful in providing the correct values for the most accurate results.