Salary Calculator

How does Salary Calculator work?

Our Salary Calculator will easily evaluate your annual pre-tax salary taking into consideration the fixed Cost To Company (CTC) offered and variable pay (bonus) with all necessary deductions.

Deductions such as Provident Fund (Employer and Employee), Professional Tax and sometimes Employee Insurance are standard components of the CTC a company offers.

What is CTC?

Cost to Company (“CTC”) is an annual employee cost incurred/to be incurred by the Company. CTC generally includes basic salary, house rent allowance (“HRA”), medical allowance, transport allowance, and other such allowances/variable pay available to the employee.

CTC = Direct benefits (monetary) + Indirect benefits (non-monetary) + Savings contribution (contribution to PF. etc.).

CTC is never equal to the amount of take-home salary of the employee. There are many components in the CTC that one does not receive as part of a take-home salary such as non-monetary benefits viz lunch benefits/Subsidized Meals & Food Coupons, Company Leased Accommodation, Life & Medical Insurance premiums paid by employers, travel facility being provided by the Company, social security benefits, etc.

Components of CTC:

1. Basic Salary

Basic salary is a fixed component of an employee’s CTC and usually ranges from 40%-50% of the total CTC. As per the new labour code, the basic salary is fixed at 50% of the CTC.

2. HRA

House Rent Allowance (HRA) is offered to the employees residing in rented accommodation. It is a fixed component of the CTC and is partially or fully exempt from taxes under the Income Tax Act.

However, HRA is fully taxable if you don’t live in rented accommodation. HRA is usually fixed as 50% of the basic salary.

3. LTA

Leave Travel Allowance (LTA) is the allowance received by employees for the expenses incurred while travelling. LTA can be claimed by submitting proof of travel documents under the Income Tax Act.

4. Medical Allowance

The Employer disburses a set amount disbursed to the Employee every month irrespective of the actual medical expenses incurred by the latter.

5. EPF

Employee contribution to Provident Fund comprises 12% of one’s salary. Contributed by both the Employer and Employee; the deductions are reflected in the monthly take home.

6. Professional Tax

Professional tax is levied by the State in which an Employee has been hired. The amount of tax deducted varies as per each state and reflects monthly on the in-hand salary receipt.

Note:

– Stock options issued if any, are not considered as part of CTC.
– Various non-monetary benefits are not considered as part of CTC.
– Certain portion of the CTC can be allocated as a bonus.

For Example:

If your Cost To Company (CTC) is Rs 12 lakh. The employer gives you a bonus of Rs 2,00,000 for the financial year. Your total gross salary is Rs 12,00,000 – Rs 2,00,000 = Rs 10,00,000. (The bonus is deducted from the CTC).