Reks,
From your question I understood that, what are the components that comes in to Gross and Net. For clear understanding purpose I have given 2-3 different explanations for the same.
Explanation no.1)
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 allowances.
Gross salary - (minus) pf contribution, ESI contribution, professional tax contribution +any other tax (as per applicability ) becomes net salary.
no.2)
Gross Salary is the agreed/committed compensation your Organisation agrees to pay on a monthly(periodic) basis against 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.
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.
Dont get confused with all the explanations. Follow only one.
Regards,
Visu.