Difference between Gross Salary and Net Salary - professional tax
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Difference between Gross Salary and Net Salary

Vyakhya Started The Discussion:

Warm Regards To All, Well can one tell me what’s the difference between Gross Salary and Net Salary Regards Srishti

Vyakhya - Contributing Member
What I think is that the Gross Salary is the total CTC and Net is what you get in hand.Am I right Seniors. Regards Srishti

rollysrivastava - Contributing Member
Hi srishti

Net salary is the take home salary of the emolyee while gross salary is the figure before making statutory or other deductions.
gross salary is basic+ HRA+ trnasport+ other allowance.
Gross salary minus pf contribution, ESI contribution, professional tax contribution etc. (as per applicability ) becomes net salary.
Hope its clear...
do revert back for further querries...

rolly

jawaid - Contributing Member
Hi srishti, As far as my salary slip tells me!!!!!!! Goross salary = Salary before deductions Net Salary = Salary after deductions Jay

swastik73 - Contributing Member
Dear Sristhi,

Gross Salary is the agreed/committed compensation your Organisation agrees to pay on a monthly(periodic) basis aginst your services for that period.

Net Salary is gross salary less the deductions which are made on account of statutory compliances(like PF, ESI, Income Tax, Professional Tax) and other dues (Like Loans and Advances taken) which you owe to the Company and Legal dues if any. It is something you get in hand and commonly refer to as Take Home Pay.

Your Income Tax is based on the Gross Pay.

While CTC or Cost to Company is equal to Gross pay + Benefits, Perks and Prequisites i.e., the total Cost a Company incurs in employing the person.

Regards,
SC

Anu_B - Contributing Member
Dear All, In case of PF contribution by employer being included in CTC, how do we arrive at Gross.........is that element not included? Best Regards' Anu

devjit28 - Contributing Member
Hi,

Just a small input from me about this.
Quote:
Originally Posted by swastik73
Your Income Tax is based on the Gross Pay.
Income Tax is based on annual CTC (or Total Income) which includes all perks & perquisities.

Also, as per my understanding, Gross Salary is the total salary received on MONTHLY BASIS. This excludes the annual components like LTA, bonus etc. CTC is Gross Pay + annual components + perks/benefits/perquisites, whether in cash or kind. Net pay is the take-home pay, after all deductions.

However, some people refer to Gross pay as the total of only the CASH components. Non-cash components like driver, sweeper, company accomodation etc which the employee does not pay for are excluded. These are a part of CTC though.

Warm regards,
Devjit

dheerajgoyal - Contributing Member
Hi devjit

Could we have come percentage splits of each of these components in compensation structure across industries ... lets say for an IT , ITES , FMCG , Pharma , Auto , Consultancy , Financial Setup , Govt ...

Regards
Dheeraj
:?:

devjit28 - Contributing Member
Hi Dheeraj, I do not have even the foggiest idea about the industry splits. If I do come across the data, I will surely share it here. Warm regards, Devjit

govardhan - Contributing Member
Hi,

Let me explain with an example -

Let us say the employee earns the following per month:

Basic Salary - INR 10000
House Rent Allowance - INR 5000
Conveyance Allowance - INR 1000
Magazine Allowance - INR 500
Education Allowance - INR 250

Then, GROSS SALARY - INR 16750

Deductions:

Provident Fund - INR 1200
Income Tax - INR 750
Profession Tax - INR 130
Loan Deduction - INR 750
Total Deductions - INR 2830

Then, NETT SALARY - INR 13920

His Leave Travel Allowance - INR 10000 per annum
Medical Reimburement - INR 10000 per annum
Premium for mediclaim - INR 1500 per annum
PF- Management Contribn-INR 16332 per annum

Then, CTC (Cost to Co.) - INR 2,38,832 per annum.

CTC = Monthly Gross Salary X 12 + Annual benefits (INR 37832)


Govardhan



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