Gross salary calculation:
We start with calculating the Gross salary as follows:
Gross salary = CTC - PF - Gratuity
The gratuity amount depends upon the tenure of service and last drawn salary. It is calculated according to this formula: Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.
Employee’s provident fund(PF) is calculated as 12% of Basic salary.
In the income tax calculator, we first calculate taxable income as follows.
Taxable income= Gross salary - PPF Investment - Tax free Allowance - HRA - LTA - Medical Insurance - Home Loan Interest(Upto Rs.2 Lakhs Per Annum) - Other Deductions
We then calculate the tax payable using the tax slabs for the current financial year (FY 2019-20) year which is as follows:
|Income Slab||Slab Rate|
|Income upto Rs 5,00,000||No Tax|
|Income from Rs 5,00,000 - Rs 10,00,000||12,500 + 20% of (Taxable income - 5,00,000)|
|Income above Rs 10,00,000||1,12,500 + 30% of (Taxable income - 10,00,000)|
10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore.
15% of income tax, where total income exceeds Rs.1 crore.
|Cess: 4% on total of income tax + surcharge.|
Finally using the above value we can compute the in hand salary as follows:
Take home salary = Gross Salary - Income Tax - PF - Professional tax
Note: Professional tax varies from state to state, but we approximate it to Rs.200/month.
Also, we have not included variable pay and income from other sources.