Salary calculator is an easy and handy device that helps in calculating the annual salary, take-home monthly salary, total annual deductions, total monthly deductions, etc., of a person.
An employee has to fill in his CTC, bonus included in CTC, monthly tax, monthly employer PF, monthly employee PF, and other monthly additional deductions in the designated boxes to get the net result.
Components of the Salary Structure
- Basic Salary: It is roughly 40% to 50% of the total salary which an employee earns based on their skills, qualifications, knowledge, experiences etc.
- House Rent Allowance or (HRA): It is a part of the salary provided by the employer to the employees who live in rented house. House Rent Allowance is fully taxable if the employee do not live in a rented house.
- Leave Travel Allowance (LTA): An employee can receive Leave Travel Allowance that an employer gives as an allowance to the employee for travel expenses.
- Professional Tax: It is the tax on employment which is imposed by the State.
- Special Allowance: An employee may alsoget a special allowance component in the salary form and it is fully taxable.
- Bonus: An employee may earn an incentive based on their performance, which is termed as a bonus.
- Employee Contribution to the PF(Provident Fund): Under the Employee Provident Fund (EPF), both the employee and the employer contribute 12% of the employee’s base salary every month.
How Do Salary Calculators Work?
To calculate the basic salary, a person must enter the CTC bonus, Provident Fund, professional tax,etc.
An example has been provided here:
Imagine your CTC(Cost To Company) is Rs 5 lakh. The employer provides you a bonus of Rs. 50,000 for the financial year. Therefore, your total gross salary is Rs. 5,00,000 – Rs. 50,000 = Rs. 4,50,000
(The bonus is deducted from the CTC).
The Gross Salary = Rs 5,00,000 – Rs 50,000 = Rs 4,50,000
- The gross salary subtracts the professional tax of Rs 2,400 a year.
- Secondly, it removes the offerings towards the(EPF)Employee Provident Fund made by both the employee and the employer.
- EPF - Employee Provident Fund contribution is calculated on a maximum salary limit of Rs 15,000 every month. It deciphers to 12% of Rs 15,000, which is Rs 1,800 every month or Rs 21,600 every year.
- The yearly contribution of Rs 21,600 towards the EPF (Employee Provident Fund), made by the employee and by the employer towards EPF (Employee Provident Fund).
- Next, let us imagine the employee also has a yearly deduction of Rs 2,000 towards some employee insurance.
Total Deductions = Professional tax+ EPF(Employee Contribution)+ EPF(Employer Contribution)+Employee Insurance
Total Deductions = Rs 2,400 + Rs 21,600 + Rs 21,600 + Rs 2,000 = Rs 47,600.
Total Salary = Gross Pay–Total Deductions
Total Salary = Rs 4,50,000 – Rs 47,600 = Rs 4,02,400
Benefits of the Salary Calculator in India
- Quick Results: Ourin hand salary calculator can compute the take-home salary in few seconds.
- Identifies Changes: The calculator assists in understanding the changes in the salary when an employee receives a bonus or any deduction.
- Clear Bifurcation: Thesalary calculator tells the different parts of an employee's salary clearly. It bifurcates and tells the amounts and deductions in aaccurate manner.
- Availing an Estimation: Our salary calculator helps in calculating and getting a clear concept about the monthly and yearly deductions, employee and employer's contribution towards EPF and others.