Understanding Salary Slips: How Much Tax and PF Will Be Deducted from My CTC of 387000?

I want some help regarding the salary structure. I want to know for the CTC of 387000, what will be the TDS or the income tax that the company will deduct and will appear in the salary slip assuming that the full investment of Rs 1 lakh and other investments is made by the employee. How will the employer and employee PF appear on the salary slip? If you can show me the breakup of this structure on the actual salary slip format, with the deductions, it would be great.

Mail me at teena251@gmail.com.

Thanks,
Teena

Hi, Teena!!!

This is regarding your query about the salary structure. You want to know about the breakup of 387,000... so please follow the below calculation for TDS.

Gross salary = 387,000

1) Less: HRA = Least of the following amounts is exempt:
1. HRA Paid by Employer
2. 50% of Basic Salary
3. House Rent Paid by Employee - less 10% of Basic Salary

2) Less: Conveyance (max 9,600 per annum)

3) Less: PF, LIC, repayment of home loan, and tuition fees, etc., up to 1 lakh as per Chapter VI & sec80c.

The balance will be bifurcated as per the slab for men & women under or above 65 years of age. After all the deductions, you can calculate your TDS per month by dividing the same by 12.

I hope the above is clear... If you have any doubts, please revert.

Salim

Hi Salim,

Thank you, I appreciate your efforts. However, it is still not clear to me what the TDS or tax will be. If you can explain to me with the help of an actual breakup of the salary in the salary slip, it would be great.

Dear Teena,

To calculate TDS on Salary, one must know the structure of the salary, including:

- Basic
- HRA
- Conv. Allowance
- Washing Allowance
- Medical Allowance
- Special Allowance

Some companies provide Conv. Reimbursement instead of Conv. Allowance, Medical Reimbursement (up to Rs. 15,000 per annum) instead of Medical Allowance, and LTA (taxable twice in a block of four years).

Under the Income Tax Act, age and sex are important for income tax deductions, and normal exemptions should be considered.

Exemptions to consider:

1. Transportation Allowance (Conv. Allowance) - Rs. 800 per month.
2. Exemption under Section 80C (PF, VPF, PPF, LIC, Mutual Fund, Pension Scheme, NSC, Children tuition fee, Investment in Bonds, House Loan Principal) - Maximum limit is Rs. 1 Lakh only.
3. Under Section 80D - Mediclaim Insurance of Rs. 15,000.00
4. Under Section 80G 80GG - Donation 100% if for child education program, else 50%.
5. HRA as per rule admissible (Actual, Amount of HRA, Paid - 10% of basic).

House loan interest paid will be deducted from income directly.

This should provide you with a basic understanding of income tax on salary. The rest depends on your company's salary structure and individual tax management. You should ask employees to provide income tax declarations for the deduction of their income tax from their salary.

Thank you,
Mohd. Arif Khan

Hi,

I would recommend going through the Income Tax Book by VK Singhania, specifically focusing on the section covering Income Tax from the Salary Head. This will provide you with a clear understanding of how to calculate each component and TDS. Additionally, if you refer to any office diary from 2007, you can find the tax slabs for men, women, and retired individuals.

I will outline the salary slab structure; it changes annually from March 31st to April 1st. Therefore, the financial year starts from April 2007 to March 2008.

Gauri

Dear sir,

The structure is really helpful, but I'm not understanding why there are two consecutive columns for PF deductions?

Kindly reply.

Regards,
Yogendra.

We have to split the salary as 60% for the basic component and the remaining 40% for other benefits. I need clarification.

Hi Ramesh,

Can we have a structure indicating the amounts payable by voucher as well? Specifically for top management such as VPs and Directors?

Thank you.

Hi,

While there is general information on CTC, I am specifically interested in having the right formula/working for positions such as Vice Presidents, Directors, and General Managers. If available on a spreadsheet, it will be welcome.

Regards, Ramesh

Hi,

In a payslip, employee PF will merely be shown in the deduction part. Employer PF contribution is used only for CTC calculation because that part will be received by the employee when he/she quits from the company.

Regards