Take home salary of an employee in India is” CTC – (Gross salary – Deductions)”. The CTC (Cost to Company) of an employee includes the PF contribution of employer and gratuity amount and any other expenses that the company is spending on the employee.
Here is the simple take home salary calculator, which you can download in Excel format and know your estimated in hand salary with salary break up.
How to Calculate Take Home Salary / In Hand Salary from CTC in India
The CTC of an employee consists of Three important components, 1. Earnings of employee 2. Deductions of employee 3. Expenses of the company on employee
|Earnings of Employee||Deductions of Employee||Expenses of Company on Employee|
|i) Basic wage|
ii) House Rent Allowances(HRA)
iii) Conveyance or Transport Allowances
v) Other/Special Allowances etc,
ii) Health Insurance
iii) PremiumProfessional Tax
|i) PF Contribution Paid by Employer|
ii) Gratuity etc.
Take Home Salary Calculation from CTC Step by Step Process
Basic Wage Calculation
Step 1: Calculate the basic wage from the CTC (40-50% of CTC)
Gross Salary Calculation
Step 2: Calculate PF contribution paid by employer i.e 12% of the basic wage.
Step 3: Gratuity paid by the employer is (basic wage/26)*15
Step 4: Now the gross salary of the employee is CTC – (PF + gratuity paid by employer)
(note: add any other expenses given by the employer)
Total Earnings Calculation
Step 5: Now calculate the HRA of employees, 40% of the basic wage for employees in nonmetro cities and 50% for employees in metro cities.
Step 6: Conveyance allowances (CA) fixed 1600 Rs per month.
Step 7: Medical allowances fixed 1250 Rs per month.
Step 8: Calculate other allowances. (Gross salary – (basic wage+HRA+CA+Medical Allowances)
Step 9: The sum of basic wage + HRA + CA + Medical Allowances + Other Allowances is called to total earnings which are equal to the above calculated gross salary. (Step 4)
Step 9: PF contribution 12% of the basic wage of the employee.
Step 10: Health insurance premium, depends on the policy type.
Step 11: Professional tax (varies in each state)
Step 11: TDS (as per the current or new income tax slab rates)
Step 12: Sum all the deductions i.e total deductions.
Net Salary/Take Home/Inhand Salary Calculation
Step 12: Total earnings – total deductions will be the net salary of the employee, which he gets in his hand every year. If you divide it by 12 months then you will get the monthly take home salary.
You don’t need to do all the calculations, just download the above take home salary calculation excel and enter your CTC, it will give you the entire breakup of your salary details.
Which tax regime is best for employees?
The existing tax slab regime is best, which allows you to get tax exemption under different sections of the income tax act.
If you choose a new tax regime then you don’t get any tax exemptions. It just simplifies the taxation process, but you need to pay higher income tax.
What is the take home salary of CTC 12 Lakhs?
If your CTC is 12 Lakhs per annum then your take home salary will be around 10,29,000 Rs per annum and 85,000 Rs per month.
Is net salary and take home salary and in hand salary the same?
Yes, all are the same.