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Gross Pay and Take Home Salary Calculator 2022-23

Take Home Salary (Monthly)

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Take Home Salary (Annual)

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Income Tax

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Take-Home Salary Calculator

In any professional set-up, at the end of the month, an employer
pays employees a pre-determined amount towards their services.
This payment is commonly known as salary. This amount is
generally stated in the contract and payslip of the employee.
The salary has several components and each of these can vary
across employers. Salary forms part of an employee’s annual
income and therefore he/she must pay taxes towards it.
Therefore, the amount that an employer pays to the employee is
different from what the employee actually receives in hand or
takes home.

Here, we will discuss take-home salary and how Fisdom’s
Take-home salary can help employees in easily determining the
salary that they can expect in hand.

Understanding the different components of
salary

Here are some of the common components of salary that
an employee should know about:

Basic salary
It forms part of the Cost to Company (CTC) paid by the employers
to the employees towards services rendered by employees. It is
usually around 40% to 50% of the employee’s total salary
depending on the industry standards, employee designation, etc.

Special allowance
This is a fixed component paid on top of the basic salary and
varies across companies.

Bonus
Bonus forms part of an employee’s gross salary and is offered as
a reward for employee performance.

House rent allowance (HRA)
This is paid to employees who live in a rented home. It is
generally estimated as 50% of the basic salary for those living
in metro cities. For employees residing in non-metro cities, the
amount is estimated as 40% of basic salary. As per Section
10(13A) of the Income Tax Act, the HRA is partially or fully
tax-exempt. For those who do not stay in a rented home, the HRA
will be fully taxed.

Leave travel allowance (LTA)
This component is paid to cover the employee’s and his/her
family’s domestic travel expenses for a holiday. This allowance
specifically covers train ticket expenses and airfares. As per
the Income-tax Act, tax exemption can be availed on the LTA
amount for a maximum of 2 holidays in 4 calendar years.

Employee Provident Fund (EPF)
This is a mandatory savings scheme that must be provided by
organisations of a certain size. It is estimated as 12% of an
employee’s basic salary and is deposited in the EPF account. The
employer makes an equal contribution to the employee’s EPF
account. The employee’s contribution is tax-deductible for a
maximum of Rs. 1.5 lakhs per year. The employer’s contribution
is considered as part of CTC and is not reflected on the salary
slip.

Professional tax
This is the tax that every employee earning a certain salary
amount must pay to the state government. This amount cannot
exceed Rs. 2,500 in a financial year.

What is Fisdom’s take-home salary calculator?

The above-mentioned salary breakdown may seem
complicated to many people. Calculation of salary can be even
trickier since it involves several aspects. Therefore, to save
an employee’s time and efforts, Fisdom has designed an online
take-home salary calculator.

Fisdom’s take-home salary calculator is an automated
online tool that helps an employee estimate his/her net salary
post-tax. It takes into account all the salary components and tax
deductions
applicable.

How to use Fisdom’s take-home salary
calculator?

Fisdom’s take-home salary calculator is simple and
quick to use. Here are the steps to be followed to use the same:

  1. Choose the preferred tax regime – old or new
  2. Select whether living in a metro or non-metro city
  3. Enter the total Cost to Company (CTC)
  4. Input the basic salary
  5. Enter rent paid per month
  6. Enter the HRA offered by the employer per month
  7. Provide the amount of investments made under Section 80C
  8. Enter amount paid towards medical insurance premium
  9. Provide the EPF per month – employer and employee
    contribution to be entered separately

Once the required details are entered, the calculator will
instantly provide the following results on the right-hand side:

  1. Tax breakup displayed in the form of a pie-chart
  2. Take-home salary (monthly)
  3. Take-home salary (annual)
  4. Income tax

Understanding the calculations of monthly
take-home salary

The take-home salary of an employee is the net amount
that remains after considering deductions from gross salary.
Here is an example to learn about the calculations for arriving
at take-home salary.

Suppose an employee’s income and expenses are as
below:
Annual CTC = Rs. 10 lakhs
Basic salary = Rs. 30,000 per month
Rent paid = Rs. 30,000 per month
HRA = Rs. 15,000 per month
Investments towards Section 80C = Rs. 1.5 lakhs
Medical insurance premium = Rs. 2,000 per month
EPF = Rs. 1,800 each of employee and employer contribution per
month
Annual income tax = approximately Rs. 28,475 as per old tax
regime
Annual income tax = approximately Rs. 78,000 as per new tax
regime

  1. The net annual take-home salary as per old tax regime will
    therefore be:
    = CTC – tax – EPF contribution
    = 10L – 28,475 – 21,600
    = Rs. 9,49,924
  2. The net annual take-home salary as per new tax regime will
    therefore be:
    = CTC – tax – EPF contribution
    = 10L – 78,000 – 21,600
    = Rs. 9,22,000

Fisdom’s take-home salary calculator also provides the monthly take-home salary amount along with annual. This makes it easier for an employee to know the amount he/she would have at his/her disposal every month.

Conclusion

Since salary calculations are often tedious, most people in India prefer the online take-home salary calculator. Fisdom’s take-home salary calculator is a free tool that can be used anytime. It offers the required data on salary within a matter of seconds and without any errors. While using the calculator, users must ensure to provide correct values for accurate results.

FAQS

What do I need to know to use the salary calculator?

To use the take-home salary calculator, you should know your annual gross salary, if applicable. The calculator will show accurate results if you also enter components like HRA, rent paid, medical insurance premium and EPF amounts.

How does the calculator determine the income tax?

The calculator uses the CTC input by the user along with the tax regime selected. Through back-end workings, it estimates the annual tax applicable as per income tax slab rates applicable.

Which is better, new or old tax regime?

The difference between old and new tax regimes is the slab rate. In the new tax regime, no deductions can be claimed v/s the old regime, which allows many deductions. Choosing between the two depends on one’s income structure, deductions applicable, and individual preferences.

How do I know the break-up of my salary?

To know the break-up of your gross salary, you can contact your employer or look through the monthly payslip.

Does the salary calculator consider tax deductions?

Yes, the calculator takes into account applicable deductions to arrive at the net tax payable and thereafter, the take-home salary