Get To Know Your Annual Pre-tax Salary
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The Salary Calculator helps derive your annual pre-tax salary, taking into consideration the fixed Cost To Company (CTC) offered and variable pay (bonus) with all necessary deductions. Such deductions include Provident Fund (Employer and Employee), Professional Tax, and sometimes Employee Insurance – all standard components of the CTC.
Please note that the salary calculated will be the pre-tax amount. TDS (tax deducted at source), if any, will be deductible separately.
CTC – The Foundation Of Your Taxable Income
Cost to Company (CTC) is the base to derive taxable income for salaried individuals. It is an annual employee cost incurred/to be incurred by the company which includes –
- Basic salary
- House Rent Allowance (HRA)
- Other Allowances (medical allowance, transport allowance, etc.)
- Variable pay (if any)
CTC – Things To Keep In Mind
- Your CTC is a combination of the direct/monetary benefits, indirect/non-monetary benefits, and employer-employee contribution to PF.
- CTC is never equal to the amount of take-home salary
- CTC has many components that one does not receive as part of take-home salary such as:
Know What Goes Into Your CTC
The fixed component of an employee’s CTC ranging between 40%-50% of the total. As per the new labour code, the basic salary is to be fixed at 50% of the CTC.
House Rent Allowance (HRA)
Offered to the employees residing in rented accommodation. It is a fixed component – partially or fully exempt from taxes but fully taxable if you don’t live in rented accommodation.
Leave Travel Allowance (LTA)
Allowance received by employees for the expenses incurred while travelling. LTA can be claimed by submitting proof of travel documents to the employer.
The Employer disburses a set amount disbursed to the Employee every month irrespective of the actual medical expenses incurred by the latter.
Employee contribution to Provident Fund comprises 12% of one’s salary. Contributed by both the Employer and Employee; the deductions are reflected in the monthly take home.
Levied and minthlydeducted by the state in which an employee has been hired, the amount of tax deducted varies statewise.