Swastik73
Human Resource And Industrial Relations
Suresh Ramalingam
Legal, Hr & Compliance
Amit_goyal_2002
Sap Hr Professional
Govardhan
Senior Hr Manager
Vyakhya
Hr Professional
Rollysrivastava
Manager- Hr
Deepak. M
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Senthil Raj
Officer In University
Devjit28
Service
Tania_m
Hr Mgr
Dheerajgoyal
Hr Professional
Praveenhr06
Human Resource
Richagupta
Hr Professional
Gundareddy
Project Officer
Singh859harpreet@yahoo.com
Labour Law & Taxation
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Warm Regards To All, Well can one tell me what’s the difference between Gross Salary and Net Salary Regards Srishti
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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
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
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
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
Hi,
Just a small input from me about this.
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
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
:?:
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
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
Dear Devjit,
You are right. But what I meant was that Annual Gross Pay which includes other perks and benefits. Perquisities I missed out. Sorry for the slip.
One more thing we should understand that all components of CTC are not included in Taxable Income like Gratuity, PF, Medical Coverage Insurance, Accident Benefits Insurance,Industry Specific Benefits.
Regards,
SC
Hi,
In addition to Gratuity, and other benefits, CTC can also incude the cost of uniform dress, if provided, the mobile phone expenses, if reimbursed, etc. etc. as Swastik rightly mentioned as Company specific benefits.
Regards,
Govardhan
Dear Govardhan, Just Tell me whether Net Salary is eqvivalent to Take home Salary i.e. Salary in hand Regards Srishti
Dear Srishti,
Yes. Nett Salary is Take Home Pay.
(However, if the employee spends some money for personal purpose on the way to home while taking his salary cash, that should not be deducted to calculate Take Home Pay, - to be on the lighter side.)
Govardhan
hello,
good replies to the queiry.
The Gross salary constituted basic, da, allowances like rent, compensatory, travelling, transport etc. So the gross salary is before effecting any kind of deduction.
Then come the Deduction like Provident Fund, ESI, Income-tax, insurance, advances taken etc.
Finally the amount credited at our bank account, or paid in by cash/cheque is Net Salary.
In gist Net Salary = Gross Salary - Deduction.
As correctly pointed out by SC, the income tax is calculated based on the Gross Salary.
I wish our Gross goes up..... :) Deduction comes down and ultimately the NET goes up :)
wishes
senthil raj

yeah Swastik is absolutely right.
Bonus and other annual benefits are also included in CTC. Gross salary is total monthly salary without monthly deductions (PF, TDS, Profesional tax, etc). Net salary is that you take home after all kinds of deductions.
HI,
please find .........
What is CTC ???
CTC (Cost To Company): It includes Employer contribution To PF (12%)
EXP: if CTC is Rs.8000
Employer Contribution To PF = 12% of CTC
i.e. 8000*12% = 360
What is Gross Salary???
CTC- Employer Contribution to PF
i.e. 8000-360 = 7640
Gross = 7640
What is Take Home Salary ???
Gross- employee contribution to PF - other deductions
Gross 7640 Employee contribution to PF (12%) 360
Other Deduction:
Mobile
Food
Cab
Regards,
Maniksing
Dear Swastik,
Can you plz forward me the format of salary slip.What items are madatory and what r not.
Actually people working in our organisation are not happy with the kind of salary slips we issue.
What deductions should be shown on the salary slip.
Thanks,
Richa
Dear Richa, Please attach your Payslip format and I will do the necessary changes and attach it back for you. Regards, SC
Hi Swastik,
PLz find the attached salary slip which we issue.We actually give the salary slip with the salary which is transferred into employee's accounts.
Can we give the salary slip mentioning the following items
Basic+HRA+Transport+Child education allowance+Conveyance Allowance(on which FBT is paid)+Bonus+PF.
Kindly reply ASAP.
Richa

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Dear Richa,
I think some minor adjustments are needed and your payslip will be absolutely ok, so instead of modifying I am putting them here only
Keeping the same format just rename the two columns as PAYMENTS and DEDUCTIONS:
In place of TOTAL under PAYMENTS put GROSS PAY
In place of TOTAL under DEDUCTIONS put NET PAY
Yes you can also use the T format of Accounts.
In almost all Organisations which issue pre-printed and/or Computer Generated Pay Slip. All Headings under which payments that are to be made to the employees are kept and same with Deductions.
The headings under which payments are made or deductions are charged the amount is given and the rest is kept blank. For example in case of Bonus. The field will remain blank for 11 months and the month in which Bonus is paid the amount is shown. Same as in the case of Advances and Loans.
One more thing the Pay slip must have the Company Name and Logo.
Revert back for further queries.
Regards,
SC
Hi people
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 ...
ps : Splits as in gross,net,ctc ....
Regards
Dheeraj
:?:
Dear Ruchi, I am enclosing some samples, but I dont think it is necessary. Your Pay Slip is more or less ok. Put the Company Logo and Name. Regards, SC
Hi ,
This is Amol agaskar working for HR Service Provide
Basic 5000
HRA 2500
Conveyance 800
Medical 1250
Gross Salary 9550
(-) PF 600
(-)ESIC 167
TDS Nil
Net Salary 8783
From the above things u can follow that Gross Salary is the Gross Earning and when u deduct the deductions from the Gross u will be getting Net Salary.
Reagrds.
CTC - Cost to Company,
In CTC Salary Distribution will be ,
(A) Basic Salary + HRA + DA
(B) Conveyance + Medical + Other / Special Allowance if any
(C) Employers Contribution for PF (12% of Basic)
Employers Contribution for ESIC (4.75% of Gross)
(D) Employees Contribution for PF (12% of Basic)
Employees Contribution for ESIC (1.75% of Gross)
Gross Salary = (A) + (B)
CTC = (A) + (B) + (C)
Net in Hand = (A) + (B) - (D)
CTC - Cost to Company,
In CTC Salary Distribution will be ,
(A) Basic Salary + HRA + DA
(B) Conveyance + Medical + Other / Special Allowance if any
(C) Employers Contribution for PF (12% of Basic)
Employers Contribution for ESIC (4.75% of Gross)
(D) Employees Contribution for PF (12% of Basic)
Employees Contribution for ESIC (1.75% of Gross)
Gross Salary = (A) + (B)
CTC = (A) + (B) + (C)
Net in Hand = (A) + (B) - (D)
Thanks and Regards,
Amol Agaskar (SR. HR Executive - HR Opeartions)
HRprowess
Gross Salary is inclusive of all the remuneration payable to an employee.
while net salary is only the take-home salary. i.e, Gross salary earned minus the deductions towards ESI, EPF, PT, Insurance etc..

Gross salary is what you receive from your company and give your wife and net salary is what you get from her in the subsequent month.
hi,friends

how is life? hope going on cool.
Gross salary is the combination of basic,da,hra,transport allowance,convenence,entertainment,special allowance and other allowance.Net salary=Gross salary-deductions(PF,ESI,PT,IT,Adavance,Union fund and others).hope it is clear.
with great wishes
sureshbabu(09247299593)

hyderabad.
My understanding of Gross salary is your income before statutory deductions. We could also equate it with the term "Basic Salary".
Net salary is therefoe the income after deuctions.Could be termed as "take home pay"
Please note however that there are certain benefits that are non cash which could have been converted into cash and added to your net salary ie Free cell phone use, Fuel etc, car maintenance
I hope you find this eplanation useful.
Paa Kow
Dear All,
The CTC structure can be broken into three major components, like CTC, Gross Salary & Net Take Home.
CTC (Includes Gross Salary + Employer Contributions like ESI, PF & Insurance if any)
Gross Salary (Includes Net Take home + Employee Contributions like ESI, PF & Prof Tax)
The final component after the above deductions, will the Net take home salary of an employee.
Rgds,
Suresh Ramalingam
Consultant - Compliance
Hello All,
Gross Salary= Your salary before any PF and ESI and TDS deduction
Net Salary= Your salary- PF deduction- ESI deduction but before TDS deduction
CTC= Yous salary+Employers's ESI and PF Share+other benefits given by the company
Amit Goyal
Hi, I want to know that Leave deduction can be done on Gross Salary/Net Salary.Please solve this query. Regards Bharti
Hi can you plz explain is there any satandard format for calculating salary break up or it differ from org.to org? Regards Supriya
hello Govardhan,
Can you clarify these, like how did u arrive at IT, ProfTax, & Loan Deduction figures?? Is there some standard % figure that will be deducted on a monthly/annual basis for the below?? I understood how you arrived at PF figure, say like 12% of basic. Also can you tell me statutory % figures for contribution by employees/employers set forth by the government w.r.t IT, ProfTax, Loans, etc (pls mention nething else that needs to be take into consideration)?
As far as my understanding goes the IT slab is 10% for the figure(2,38,832) we are discussing in this case. So I tried to deduce how you arrived at IT (750) figure, assuming under 10% IT Slab and tried calculating but could not come to the figure you mentioned.
10% (238832)=23883/12=1990/month. I'm able to arrive closely to 750 by a 4.47% of 16750. Is this correct???
Thanks

I am agree with Rolly, below I put a example ... Basic HRA LA DA Gross PF ESIC Net Pay 5000 2000 1000 2500 10500 600 184 9716
Dear all,
Please guide me about EPF & ESI Percentage's need to be given to out sourced agency hired by my organization.
Total we have hired total 14 helpers from out sourced agency their gross salary is Rs.7072.(How much PF & ESI contribution should be paid by employer & how much contribution should paid by the helper in % please guide).
Following ( helpers salary) 5 helper salary is Rs.7089.(How much PF & ESI contribution should be paid by employer & how much contribution should paid by the helper in % please guide). or mail me on : ceegulbarga@ceeindia.org.
Thanking you With Regards
Gundareddy.U
Project Officer
Centre for Environment Education.
mobile no: 9620121410 / 9620441410
Gross Salary, Net Salary and CTC are different . Net salary is the salary which a employee take home salary. CTC = Cost to Company
Hi Srishti,
Net Salary = Employee Take Home Salary
CTC = Cost to Company , this is the salary package of an employee. It is expenses of an employer spending on Employee for his service period of one year. CTC is not the actual salary of the employee.

I am fully agreed with your example that ctc=gross salary+gratuity+employer contribution(pf,esi) +bonus+leave encasment+reimbursement
But some people include employee contribution (pf,esi)
In gross salary
Please clarify this with an example
Thanks
Harpreet singh
Thanks Alot Govardhanji, For this full explanation about CTC and gross salary.
If an employee gross salary is 20000 Rs Then
Net Salary = 20000-(PF 1800 + ESI 350 + PT 150)= 17700 Rs
(PT varies from state to state)
Cost To Company = Gross Salary + 13.36% PF on Basic wage + 4.75% ESI On Gross Salary
Read complete difference @ Gross Salary Net Salary Difference & Cost To Company
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