Take Home Salary Calculator
FAQs on AmbitionBox Salary Calculator
What is Salary and it’s components?
Salary is a fixed amount of money or compensation paid to an employee by an employer in return for work performed. It is usually paid at the end of each month.
The salary components vary with different employers. Below is a list of the most common salary components.
Basic Salary: It is a fixed base part of an individual’s compensation package. Basic Salary is taxable & usually 35-50% of the total gross salary. However, it is usually determined by taking an employee’s designation, experience & industry of work into account.
House Rent Allowance (HRA): It is a monetary benefit given to employees by companies for expenses related to rented accommodation. It is a fully taxable component if you do not stay in rented property.
Leave Travel Allowance (LTA): It is a type of allowance which is provided by the employer to his employee who is travelling on leave from work to cover his travel expenses. LTA is an important component of the salary of the employee as it is eligible for income tax exemption as per the Income Tax Act, 1961.
Special Allowance: Special allowance is a fixed amount that is given to employees over and above the basic salary in order to meet certain requirements. It is a fully taxable component of your salary.
Bonus: It is a performance based incentive given to the employee by their employer. The entire bonus amount is fully taxable.
Employee provident fund: It is an investment made by both the employer and employee. Each contributes 12% of the employee’s basic salary towards EPF. The lump-sum amount of this acts as an employee's retirement benefits scheme. Contribution is available for a deduction under Section 80C of the Income Tax Act, 1961.
Professional Tax: It is the tax levied and collected by the state governments in India. It is a direct tax and the maximum amount payable per year is INR 2,500.
Calculating the salary is complicated as it includes various aspects. People prefer using salary calculator tool in India to save time and effort.
The salary components vary with different employers. Below is a list of the most common salary components.
Basic Salary: It is a fixed base part of an individual’s compensation package. Basic Salary is taxable & usually 35-50% of the total gross salary. However, it is usually determined by taking an employee’s designation, experience & industry of work into account.
House Rent Allowance (HRA): It is a monetary benefit given to employees by companies for expenses related to rented accommodation. It is a fully taxable component if you do not stay in rented property.
Leave Travel Allowance (LTA): It is a type of allowance which is provided by the employer to his employee who is travelling on leave from work to cover his travel expenses. LTA is an important component of the salary of the employee as it is eligible for income tax exemption as per the Income Tax Act, 1961.
Special Allowance: Special allowance is a fixed amount that is given to employees over and above the basic salary in order to meet certain requirements. It is a fully taxable component of your salary.
Bonus: It is a performance based incentive given to the employee by their employer. The entire bonus amount is fully taxable.
Employee provident fund: It is an investment made by both the employer and employee. Each contributes 12% of the employee’s basic salary towards EPF. The lump-sum amount of this acts as an employee's retirement benefits scheme. Contribution is available for a deduction under Section 80C of the Income Tax Act, 1961.
Professional Tax: It is the tax levied and collected by the state governments in India. It is a direct tax and the maximum amount payable per year is INR 2,500.
Calculating the salary is complicated as it includes various aspects. People prefer using salary calculator tool in India to save time and effort.
What is a Salary Calculator?
The salary calculator or take home salary calculator is a tool that calculates your in-hand salary based on the Cost To Company (CTC) or total salary package after all taxation and deductions.
The salary calculator will show you all the deductions such as the employer and employee provident fund, professional tax, employee insurance, income tax and the take-home salary.
The salary calculator will show you all the deductions such as the employer and employee provident fund, professional tax, employee insurance, income tax and the take-home salary.
How to use the AmbitionBox salary calculator?
The AmbitionBox Salary Calculator calculates in-hand or take-home salary instantly.
To use the AmbitionBox Salary Calculator, follow below steps.
To use the AmbitionBox Salary Calculator, follow below steps.
- Enter company name, designation and your yearly cost to the company or the CTC.
- Select the tax regime based on your preference.
- Once you submit all the required details, It will instantly calculate and display your take home monthly salary along with other components such as basic salary, HRA, professional tax, EPF and income tax.
- You can edit/update all the information and take home salary will be updated instantly.
How does AmbitionBox salary calculator calculate the monthly take home salary?
Take-Home Salary is the total salary that an employee gets after all necessary deductions are made.
Understand from below how AmbitionBox salary calculator exactly calculates the in-hand or take home salary.
Step 1. Start with calculating the Gross Salary:
Gross salary is not your basic salary nor your CTC. It is obtained by subtracting the Employer's contribution to Provident Fund (EPF) and Gratuity from Cost to Company (CTC).
Gross Salary = Cost to Company (CTC) - Employer's PF Contribution (EPF) - Gratuity
Gratuity calculation:
Gratuity = (Basic salary + Dearness allowance) × 15/26 × No. of Years of Service
We can assume dearness allowance to be zero as it is a cost of living adjustment allowance paid to Government employees, Public sector employees (PSU) and pensioners in Pakistan, Bangladesh, and India. Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people.
The gratuity that is subtracted every year is = 15/26 x Basic Salary (Monthly) X 1
Step 2. Then calculate the Taxable Income:Taxable income is obtained by subtracting Tax-free Allowance, House Rent Allowance (HRA), Leave Travel Allowance (LTA) Professional Tax, Medical Insurance, Tax Saving Investments.
Taxable Income = Gross Salary - Employees PF Contribution(PF)/PPF investment - Tax free Allowance - HRA - LTA - Medical Insurance - Tax. Saving Investments - Other Deductions
HRA that can be exempted is calculated as the minimum of three values:
The amount received as the HRA from the employer. Actual rent paid minus 10% of the basic salary. 50% of the basic salary if staying in a metro city and 40% in a non-metro city
Step 3. Calculate Income Tax: Calculate Income tax by applying the one of the below Income Tax Slabs and rates. FY21-22, Individuals have options to choose from 2 different Tax Slabs and Rates.
Option-1 Old Tax Regime
Individual (resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year:
This will be applicable for Financial Year 2022-23 (or Assessment year 2023-24).
Step 4. Now, calculate the Take Home Salary: Use the below formula for the same. Professional tax varies from state to state. It is not very significant. And hence we approximate it to 200 per month. The maximum Professional tax possible in a year is 2500.
Take-Home Salary = Gross Salary - Income Tax - Employees PF Contribution (PF) - Prof. Tax
Understand from below how AmbitionBox salary calculator exactly calculates the in-hand or take home salary.
Step 1. Start with calculating the Gross Salary:
Gross salary is not your basic salary nor your CTC. It is obtained by subtracting the Employer's contribution to Provident Fund (EPF) and Gratuity from Cost to Company (CTC).
Gross Salary = Cost to Company (CTC) - Employer's PF Contribution (EPF) - Gratuity
Gratuity calculation:
Gratuity = (Basic salary + Dearness allowance) × 15/26 × No. of Years of Service
We can assume dearness allowance to be zero as it is a cost of living adjustment allowance paid to Government employees, Public sector employees (PSU) and pensioners in Pakistan, Bangladesh, and India. Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people.
The gratuity that is subtracted every year is = 15/26 x Basic Salary (Monthly) X 1
Step 2. Then calculate the Taxable Income:Taxable income is obtained by subtracting Tax-free Allowance, House Rent Allowance (HRA), Leave Travel Allowance (LTA) Professional Tax, Medical Insurance, Tax Saving Investments.
Taxable Income = Gross Salary - Employees PF Contribution(PF)/PPF investment - Tax free Allowance - HRA - LTA - Medical Insurance - Tax. Saving Investments - Other Deductions
HRA that can be exempted is calculated as the minimum of three values:
The amount received as the HRA from the employer. Actual rent paid minus 10% of the basic salary. 50% of the basic salary if staying in a metro city and 40% in a non-metro city
Step 3. Calculate Income Tax: Calculate Income tax by applying the one of the below Income Tax Slabs and rates. FY21-22, Individuals have options to choose from 2 different Tax Slabs and Rates.
Option-1 Old Tax Regime
Individual (resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year:
This will be applicable for Financial Year 2022-23 (or Assessment year 2023-24).
| Income Slab | Tax Rate |
|---|---|
| Upto 2,50,000 | Nil |
| From Rs.2,50,001 to Rs.5,00,000 | 5% + Cess (Rs.12,500 rebate will be available to individuals who have an income of up to Rs.5 lakh under Section 87A of the Income Tax Act, 1961) |
| From Rs.5,00,001 to Rs.10,00,000 | 12,500 + 20% of (Taxable income - Rs.5 lakh) + Cess |
| Income from Rs 10,00,001 – 50,00,000 | 1,12,500 + 30% of (Taxable income - Rs.10 lakh) + Cess |
Surcharge: - 10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000. *In 2019, Govt has proposed to levy surcharge of 25% on those having taxable income of more than Rs 2 Cr upto 5 Cr.
Cess: - 4% of taxable income.
15% of income tax where total income exceeds Rs. 1,00,00,000. *In 2019, Govt has proposed to levy surcharge of 25% on those having taxable income of more than Rs 2 Cr upto 5 Cr.
Cess: - 4% of taxable income.
Step 4. Now, calculate the Take Home Salary: Use the below formula for the same. Professional tax varies from state to state. It is not very significant. And hence we approximate it to 200 per month. The maximum Professional tax possible in a year is 2500.
Take-Home Salary = Gross Salary - Income Tax - Employees PF Contribution (PF) - Prof. Tax
What is the difference between CTC & Take Home Salary?
CTC is simply “Cost to Company” i.e. in the total calculation of salary package including all monetary & non-monetary benefits spent on an employee by the company without any tax deductions.
Take Home Salary is the total salary which an employee gets after all necessary tax and other deductions are made.
Take Home Salary is the total salary which an employee gets after all necessary tax and other deductions are made.
How much is Basic Salary of CTC?
Basic salary is a fixed base part of an individual’s compensation package. Basic Salary is taxable & usually comprises of 35-50% of the total gross salary. However, it is usually determined by taking an employee’s designation & industry of work into account. There is no exact formula for calculating the basic salary. It is completely up to the employer to decide the exact amount of basic salary.
What is Gratuity? When can you avail it?
Gratuity is defined as a monetary benefit given by an employer to his/her employee in return for the services rendered by him/her. Eligibility to receive gratuity is dependent on the fact that a person should have completed at least 5 years in an organisation. However, gratuity can be paid before completion of 5 years only in case of death of an employee or incase he/she becomes disabled due to an accident or disease.
What is Employers Provident Fund?
Employers Provident fund is an investment made both by the employer and an employee each month towards Employees Provident Fund. The lump sum amount of this acts as an employee's retirement benefits scheme.
This amount is directly deposited in the employee’s PF account. One can check their PF balance here.
Please note that Employer Provident Fund (EPF) and Employee’s PF contribution are two different things.
This amount is directly deposited in the employee’s PF account. One can check their PF balance here.
Please note that Employer Provident Fund (EPF) and Employee’s PF contribution are two different things.
How much contribution is mandatory from an Employer towards Employees Provident Fund?
Under the scheme, Employees' Provident Funds and Miscellaneous Provisions Act, 1952, an employee contributes a certain amount towards EPF on monthly basis & an equal contribution should be made from the employer's end.
Provident fund contribution is mandatorily either of the following:
Case 1: If your basic salary < 15000 (per month)
Contribution: 12% of the basic salary
Case2: If your basic salary > 15000 (per month)
Contribution: In this case the company has an option to either contribute 12% of 15,000 (i.e. 1800) or 12% of Basic salary.
Therefore, 12% of the basic salary is contributed by the employer and the other 12% is contributed by the employee. Normally, we see that the contribution from the employer can not be seen in the payslip but can only be seen your offer letter. The contribution that is made as a part of your salary is called EPF and can be seen in the payslip. Contribution to the provident fund is mandatory for Indian companies.
Provident fund contribution is mandatorily either of the following:
Case 1: If your basic salary < 15000 (per month)
Contribution: 12% of the basic salary
Case2: If your basic salary > 15000 (per month)
Contribution: In this case the company has an option to either contribute 12% of 15,000 (i.e. 1800) or 12% of Basic salary.
Therefore, 12% of the basic salary is contributed by the employer and the other 12% is contributed by the employee. Normally, we see that the contribution from the employer can not be seen in the payslip but can only be seen your offer letter. The contribution that is made as a part of your salary is called EPF and can be seen in the payslip. Contribution to the provident fund is mandatory for Indian companies.
What is VPF? What is the maximum amount that an employee can contribute towards VPF?
Voluntary Provident Fund or VPF is a provident fund scheme wherein an employee can contribute the desired portion of his/her salary towards EPF account. However, it should be noted that this is a voluntary scheme & Employers are not bound to pay the same amount towards Employees Provident Fund under this scheme.
The Employee is free to contribute the full amount of basic salary as well as the Dearness Allowance.
The Employee is free to contribute the full amount of basic salary as well as the Dearness Allowance.
What is HRA? How much tax is exempted on HRA?
HRA or House Rent Allowance is simply a monetary benefit given to employees by companies for expenses related to rented accommodation.
The minimum tax-exempt portion of HRA received will be calculated based on the following rules:
The minimum tax-exempt portion of HRA received will be calculated based on the following rules:
- The actual rent that is paid should be less than 10% of the basic salary.
- In case you’re staying in a metro, 50% of the basic salary and 40% if you live in a non-metro city.
- Actual HRA component of your salary.
What is Form 16?
Form 16 is issued by the company, it contains details such as; salary earned by the employee and the amount of tax deducted. In other words, Form 16 can be defined as a detailed written document wherein a company provides complete information of its each employees salary along with all the legal tax deductions on his/her CTC. It is mandatory for the taxpayer (employee) to submit Form 16 in order to file the Income Tax returns every financial year. This form acts as the proof of his/her income and tax paid to the government.
What is the formula for salary calculation?
Take Home Salary = Gross Salary - Income Tax - Employee's PF Contribution(PF) - Prof. Tax.
Gross Salary = Cost to Company (CTC) - Employer's PF Contribution (EPF) - Gratuity.
Gratuity = (Basic salary + Dearness allowance) × 15/26 × No. of Years of Service.
Taxable Income = Gross Salary - Employee's PF Contribution(PF)/PPF investment - Tax free Allowance - HRA - LTA - Medical Insurance - Tax. Saving Investments - Other Deductions.
Gross Salary = Cost to Company (CTC) - Employer's PF Contribution (EPF) - Gratuity.
Gratuity = (Basic salary + Dearness allowance) × 15/26 × No. of Years of Service.
Taxable Income = Gross Salary - Employee's PF Contribution(PF)/PPF investment - Tax free Allowance - HRA - LTA - Medical Insurance - Tax. Saving Investments - Other Deductions.
What is the income tax slab for Financial Year 2024-25 (or Assessment year 2025-26) as per old tax regime?
Income tax slab as per old tax regime
Income Tax Slab for FY 2022-23 is as follows:
Income Tax Slab for FY 2022-23 is as follows:
| Income Slab | Tax Rate |
|---|---|
| Upto 2,50,000 | Nil |
| From Rs.2,50,001 to Rs.5,00,000 | 5% + Cess (Rs.12,500 rebate will be available to individuals who have an income of up to Rs.5 lakh under Section 87A of the Income Tax Act, 1961) |
| From Rs.5,00,001 to Rs.10,00,000 | 12,500 + 20% of (Taxable income - Rs.5 lakh) + Cess |
| Income from Rs 10,00,001 – 50,00,000 | 1,12,500 + 30% of (Taxable income - Rs.10 lakh) + Cess |
Surcharge: - 10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000. *In 2019, Govt has proposed to levy surcharge of 25% on those having taxable income of more than Rs 2 Cr upto 5 Cr.
Cess: - 4% of taxable income.
15% of income tax where total income exceeds Rs. 1,00,00,000. *In 2019, Govt has proposed to levy surcharge of 25% on those having taxable income of more than Rs 2 Cr upto 5 Cr.
Cess: - 4% of taxable income.
What is the income tax slab for Financial Year 2024-25 (or Assessment year 2025-26) as per new tax regime?
New tax regime (post budget) for Financial year 2024-25
Income Tax Slab for FY 2024-25 is as follows:
Income Tax Slab for FY 2024-25 is as follows:
| Income Slab | Tax Rate |
|---|---|
| Upto 3,00,000 | Nil |
| From Rs.3,00,001 to Rs.7,00,000 | 5% + Cess |
| From Rs.7,00,001 to Rs.10,00,000 | 20,000 + 10% of (Taxable income - Rs.7 lakh) + Cess (Rs.25,000 rebate will be available to individuals who have an income of up to Rs.7 lakh under Section 87A of the Income Tax Act, 1961) |
| From Rs.10,00,001 to Rs.12,00,000 | 50,000 + 15% of (Taxable income - Rs.10 lakh) + Cess |
| From Rs.12,00,001 to Rs.15,00,000 | 80,000 + 20% of (Taxable income - Rs.12 lakh) + Cess |
| Income above Rs 15,00,001 | 1,50,000 + 30% of (Taxable income - Rs.15 lakh) + Cess |
Surcharge: - 10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000. *In 2019, Govt has proposed to levy surcharge of 25% on those having taxable income of more than Rs 2 Cr upto 5 Cr.
Cess: - 4% of taxable income.
Exemptions: - Standard deduction of Rs.50,000 has been hiked to Rs.75,000 in the new tax regime FY 2024-25.
15% of income tax where total income exceeds Rs. 1,00,00,000. *In 2019, Govt has proposed to levy surcharge of 25% on those having taxable income of more than Rs 2 Cr upto 5 Cr.
Cess: - 4% of taxable income.
Exemptions: - Standard deduction of Rs.50,000 has been hiked to Rs.75,000 in the new tax regime FY 2024-25.
Any individual opting to be taxed under the new tax regime will have to give up certain exemptions and deductions.
Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.
Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.
- House Rent Allowance (HRA)
- Leave Travel Allowance
- Conveyance
- Relocation allowance
- Children education allowance
- Standard deduction
- Interest on housing loan (Section 24)
- Daily expenses in the course of employment
- Helper allowance
- Other special allowances [Section 10(14)]
- Professional tax
- Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
What is the New Tax Regime FY 2023-24?
In Union Budget 2023, the Finance minister introduced the new tax regime with lower tax rates giving the individual taxpayers option to choose between the old tax regime and the new tax regime.
The new system is applicable from 01-April-2023 (FY 2023-24). The proposed lower tax rates will be applicable only if you are willing to give up exemptions and deductions available under various provisions of the Income-tax Act, 1961. However, after April 1, 2023, an individual will be able to claim a basic deduction of Rs 50,000 on salary income as well as a deduction under Section 80 CCD (2) of the Income-tax Act of 1961.
The employer's contribution to the Tier-I NPS account can be deducted under Section 80CCD (2).
In a fiscal year, the maximum deduction that can be claimed is 10% of basic pay plus dearness allowance (DA). The highest deduction available to government employees is 14% of basic salary plus dearness allowance.
If an individual taxpayer opts for the new tax regime, then he/she cannot claim tax deductions and exemptions except for deduction under section 80CCD(2) of the Income-tax Act, 1961.
The employer's contribution to the Tier-I NPS account can be deducted under Section 80CCD (2).
In a fiscal year, the maximum deduction that can be claimed is 10% of basic pay plus dearness allowance (DA). The highest deduction available to government employees is 14% of basic salary plus dearness allowance.
If an individual taxpayer opts for the new tax regime, then he/she cannot claim tax deductions and exemptions except for deduction under section 80CCD(2) of the Income-tax Act, 1961.
What is the New Tax Regime post budget FY 2024-25?
In Union Budget 2024, the Finance minister introduced the new tax regime with lower tax rates giving the individual taxpayers the option to choose between the old tax regime and the new tax regime.
The new system is applicable from 01-April-2024 (FY 2024-25). The proposed lower tax rates will be applicable only if you are willing to give up exemptions and deductions available under various provisions of the Income-tax Act, 1961. However, after April 1, 2023, an individual will be able to claim a basic deduction of Rs 50,000 on salary income as well as a deduction under Section 80 CCD (2) of the Income-tax Act of 1961 which has now been increased to Rs.75,000 in the new tax regime.
The employer's contribution to the Tier-I NPS account can be deducted under Section 80CCD (2).
In a fiscal year, the maximum deduction that can be claimed is 10% of basic pay plus dearness allowance (DA). The highest deduction available to government employees is 14% of basic salary plus dearness allowance.
If an individual taxpayer opts for the new tax regime, then he/she cannot claim tax deductions and exemptions except for deduction under section 80CCD(2) of the Income-tax Act, 1961.
Which tax regime should be chosen?
There is no specific answer to it. Taxpayers should assess the benefits from the old tax regime and new tax regime before choosing the one that works better. To help you further, we have written a full article with examples
here.
Does CTC include PF?
Cost to company(CTC) includes all detailed cost incurred on an employee, including Employer’s contribution to Provident Fund. CTC can be calculated using the following formula:
Cost to Company = Gross Salary + PF + Gratuity
Cost to Company = Gross Salary + PF + Gratuity
What is the difference between Financial and Assessment Year?
Since income can’t be taxed before it's earned, so the terms financial year & assessment year were coined. A financial year is the time period wherein income is earned, the assessment year is the following year where tax evaluation is done for the income earned in the previous financial year.
Example: If an individual starts earning in the year 2020, that year shall be known as the financial year & in 2021 his/her tax shall be calculated, which shall be known as assessment year.
Example: If an individual starts earning in the year 2020, that year shall be known as the financial year & in 2021 his/her tax shall be calculated, which shall be known as assessment year.
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