Salary Structure and components INDIA Gross Salary Vs Net Vs Cost to Company-CTC

Salary Structure and components (INDIA)
(Gross Salary Vs Net Vs Cost to Company -C.T.C)

 1. CTC – Cost to Company

1.This is a total salary Package of Employee.

2.It includes all the benefits received by employee in a year.

3.It is not actual salary of employee.

4.It is a total amount that a company spends on a Employee in a year.

5.It will never equal to the amount of money which employee takes home.

CTC = Gross Salary + Incentives + Other Expenses

Breakup of CTC Package :

1.Gross Salary Components 

2.Incentives

3.Other Expenses

4.Employer Side Provident Fund

5.Employer Side Employer State Insurance

Gross Salary

1.Gross Salary is the salary which is before any deduction made from it.

2.EPF (Employee Provident Fund) is subtracted from Gross Salary.

3.Gross Salary Components contains Fixed Amount.

4.ESI (Employee State Insurance) is subtracted from Gross Salary.

Components of Gross Salary

1.Basic Salary

2.House Rent Allowance

3.Special Allowances

4.Educational Allowances

5.Medical Allowances

6.Leave Travel Allowances

Note:      Reimbursement for Travel and Food expenses for Official/  Business Purpose are not part of Gross Salary.

Net Salary

1.Net Salary is the salary which is Employee takes home.

NET Salary = Gross Salary – All Deduction

Deduction = ( Employer Provident Fund + Employer ESI + 

                          Professional Tax + Income Tax)

Deduction Components

1.Income Tax

2.EPF ( Employee Side)

3.Pension

4.Professional Tax

5.Labour Welfare Tax

6.ESI ( Employee Side)

Example CTC = 21,000/-

 

Gross Salary         = CTC – Employer side PF 

                                  (12% of Basic) – Employer 

                                 

                                    side ESI ( 3.75% of Gross)

                                   

                                = 21,000 – 1,153 – 625

                                 

                                = 19,222

1.Basic Salary                 = 9,611/- (50% of Gross Salary)

2.HRA                               = 4,806/- ( Half of Basic Salary)

3.Special Allowances    = 4,606    ( Gross salary – (Basic 

                                       + HRA + Education Allowance)) 

4.Education Allowance = 200       ( Fixed)

5.Employee side PF        = 1,153/- (12% of Basic Salary)  

6.Employee side ESI       = 144/-   ( 0.75% of Gross       
                                                                          Salary)

7.Professional Tax          = 200/-    ( Fixed – as per state)

8.Income Tax                   = 0/-         ( No Tax Applicable 

                                      for less than 5lac Per year Salary)

Gross Salary = Basic Salary + HRA + Special Allowance + 

                           Educational Allowance

Deduction = Gross Salary – ( Employer Provident Fund + 

                      Employer ESI + Professional Tax + Income Tax)

Gross Salary  = 9,611 + 4,806 + 4,606 + 200          

                        

                         =19,222/-

Deduction   = 1,153 + 144 + 200

                      = 1,497/-  

Net Salary    =  Gross Salary - Deductions 

                       = 19,222 – 1,497

                       = 17,725 /- Take home          

 For more information you can Check below video how to 
 calculate