Here is how to calculate your monthly salary (India)!
Many of my friends, colleagues and juniors are sending me their offer letters, to judge whether their offer is worth on take home front!
So, I thought writing a post on take home calculation not only help my friends, but also others who are seeking help!
The Take-Home Calculation
The Take Home calculation is the sum of Basic Pay, HRA, Conveyance, Education, LTA or other allowances.
Your Take home doesn’t include the Company Contribution to PF, or any other benefits given by your company.
Explained: The Take Home Salary Components
This is a very basic pay which is fixed, no bonuses or allowances are added to it. 12% of your Basic Pay is always deducted to your Employee Provident Fund account or PF account. This is common across all companies. Other than the 12% basic, remaining becomes taxable!
HRA / House Rent Allowance
This is an allowance given by the employer to the employee to fulfill the employee’s accommodation needs. This component is subject to tax exemption based on a calculation.
Conveyance or Transport Allowance
This is just a transport allowance that companies give you, and the good part is, this could be completely tax exempted.. This is applicable only if your CTC has it.
This allowance is applicable if you have children. Maximum of 100 per month is tax exempted and limited to 2 children only. This is applicable only if your CTC has it.
Medical allowance / Medical Reimbursement
Medical allowance is tax exempted up to INR 15000.. Anything over it is taxable
LTA / Leave Travel Allowance
If your CTC has this component, then you could claim a tax exemption on the amount mentioned in your CTC. You will have to submit an up and down journey ticket ( with the receipt) to claim this amount.
Meals / Meal Coupons
Some of the companies are issuing meal coupons like Sodexo passes, and these are subject to full tax exemptions. Again, this is applicable only if you have the component mentioned in your CTC. The maximum limit is the amount mentioned in your CTC
Other allowances like Special Allowance, Advanced Statuatory Bonus, Supplementary Allowance, Lifestyle allowance, Holiday allowance, City Compensatory allowance, Deployment allowance / Performance incentives / Performance linked incentives, Personal allowance, Dearness Allowance are completely taxable.
Well, why do I need to understand the salary components mentioned above?
The answer is simple, it gives you an idea on how to save your hard-earned money from being paid as income tax. Want to know more on income tax calculation? Click here
Do you have any calculator which quickly calculates my Take home salary?
Yes, of course, here is a downloadable excel sheet calculator
* Tested & verified on HP, KONE, HCL, CSC, iNautix and Flextronics Payslips..
Originally published at madbucks.in on October 27, 2015.