What is a Salary Calculator?
A Salary Calculator is a powerful tool designed to help you estimate your take-home pay after deductions. It considers various components like Basic Salary, HRA, and more, while factoring in deductions like Provident Fund (PF), Professional Tax, Income Tax, Gratuity, and Home Loan Interest. With this tool, you can get a clear picture of your actual earnings.
How to Use INDmoney’s In-Hand Salary Calculator
Navigating your way through INDmoney's In Hand Salary Calculator is a breeze, allowing you to swiftly estimate your take-home pay with precision. Follow these simple steps to make the most of this user-friendly tool:
Step 1: Enter Your Details
Begin by entering your essential information:
- Yearly CTC: Enter your annual Cost to Company (CTC), the sum of all your components.
- Basic Salary: A part of the CTC which is completely taxable.
- Select Tax Regime: Choose your In-Hand Salary Calculation according to the tax regime you prefer (New vs. Old).
Step 2: Submit Your Details
After entering the necessary information, click on the 'Calculate' button.
Step 3: Instant Calculation
Watch as the magic happens! INDmoney's calculator will process your details and instantly present you with a comprehensive salary breakdown:
- Take-Home Salary: Your net earnings after all deductions and taxes.
- HRA: Housing-related allowance, if applicable.
- Professional Tax: State government-imposed tax on earnings.
- EPF: Employee Provident Fund contributions, typically Rs 1800/month by default.
- Income Tax: Amount deducted as per the chosen tax regime.
- Medical Insurance: Provided by the company as a part of CTC for employee health benefits.
Step 4: Edit and Update
Want to know your exact in-hand salary? No problem! Feel free to update the given components, and the changes will reflect in the amount accordingly. As you make changes, the calculator works its magic once again, instantly updating your take-home salary and component details.
Gross Pay and Take Home Salary
- Gross Pay: Calculated by subtracting EPF and Gratuity amounts from the Cost-to-Company (CTC).
- Take Home Salary: Calculated by eliminating Income Tax from the Gross Pay.
Components of Salary
1. Basic Salary
- Definition: The core component of an employee's salary, forming 40-50% of the total compensation.
- Taxation: Fully taxable.
- Role: Forms the basis for other salary components and benefits.
2. House Rent Allowance (HRA)
- Definition: An allowance provided for rental expenses.
- Exemption: Partially or fully exempt under Section 10(13A) if the employee lives in rented accommodation.
- Conditions: Fully taxable if the employee does not reside in rented accommodation.
3. Leave Travel Allowance (LTA)
- Definition: An allowance for travel expenses incurred during leave.
- Exemption: Available under Section 10(5) for travel within India, provided proof of travel is submitted.
- Conditions: Can be claimed twice in a block of four years.
4. Special Allowance
- Definition: Additional allowance for specific purposes such as attire, academic materials, or internet subscription.
- Taxation: Fully taxable.
- Role: Covers expenses not included in other allowances.
5. Bonus
- Definition: Performance-based incentive.
- Taxation: Fully taxable.
- Role: Usually provided annually as a reward for meeting performance targets.
6. Employee Provident Fund (EPF)
- Definition: A retirement benefits scheme where both employer and employee contribute 12% of the employee’s basic salary.
- Taxation: Employee contributions are deductible under Section 80C. Employer contributions are exempt up to a certain limit.
- Role: Provides financial security post-retirement.
7. Professional Tax
- Definition: State-level tax on employment.
- Taxation: Varies by state, with a maximum limit of ₹2,500 per year.
- Role: Deducted from the employee’s salary by the employer.
8. Gratuity
- Definition: A lump sum paid upon retirement or resignation after five years of continuous service.
- Exemption: Exempt up to ₹20 lakhs under Section 10(10) for non-government employees.
- Role: Recognizes long-term service.
Key Insights
- Tax Implications: Understanding the tax treatment of each component helps in efficient tax planning.
- Benefit Utilization: Employees should maximize the use of tax-exempt allowances and deductions to reduce taxable income.
- Salary Structure Optimization: Employers can design salary packages to offer tax advantages and enhance employee satisfaction.
By comprehensively understanding these components, both employees and employers can make informed decisions that optimize financial and tax outcomes.
How Is In-hand Salary Calculated? Budget 2025 Income Tax Update
In-hand salary also known as take-home salary is calculated after deducting the taxes, provident fund (EPF), and other statutory deductions. Let’s understand how in-hand salary is calculated from your CTC (Cost to Company).
The Union Budget 2025, announced on 1st February 2025, introduced significant changes to the income tax structure, revising the tax slabs, exemption limits, and rebates. Here’s what’s new for salaried individuals:
- The basic tax exemption limit for FY25-26 has been increased from ₹300,000 to ₹400,000.
- Rebate under section 87A has been increased from ₹25,000 to ₹60,000.
- The Standard deduction for salaried individuals has been increased from ₹50,000 to ₹75,000.
Income Tax Rate Under The New Tax Regime for FY 2025-26 are as follows:
| Income Slab | Tax Rate |
| Up to ₹4,00,000 | NIL |
| ₹4,00,001 - ₹8,00,000 | 5% |
| ₹8,00,001 - ₹12,00,000 | 10% |
| ₹12,00,001 - ₹16,00,000 | 15% |
| ₹16,00,001 - ₹20,00,000 | 20% |
| ₹20,00,001 - ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
How Does This Impact Salaried Individuals?
Let’s understand the new tax regime affects your in-hand salary. Say, your salary after deductions like Gratuity, EPF, and HRA comes to ₹12,75,000. Your tax liability becomes zero due to the new tax benefits. Here's a breakdown:
| Component | Amount |
| Gross Salary | 12,75,000 |
| (-) Standard Deduction | 75,000 |
| Taxable Income | 12,00,000 |
Tax Calculation (as per new slabs)
| 0 - ₹400,000 | ₹0 |
| ₹400,001 - ₹800,000 | ₹20,000 (5% of 40,000) |
| ₹800,001 - ₹1200,000 | ₹40,000 (10% of 400,000) |
| Total Tax before Rebate | 60,000 (20,000 +40,000) |
| (-) Rebate under section 87A | ₹60,000 |
| Tax Payable | 0 |
Since the entire tax is waived off through rebate, your in-hand salary remains ₹12,75,000, with no tax deductions.
Let’s now understand how much tax you will pay if your salary after deductions comes to ₹14,00,000 under the new tax regime.
| Component | Amount |
| Gross Salary | 14, 00 ,000 |
| (-) Standard Deduction | 75,000 |
| Taxable Income | 13,25,000 |
Tax Calculation (as per new slabs)
| 0 - ₹400,000 | ₹0 |
| ₹400,001 - ₹800,000 | ₹20,000 (5% of 40,000) |
| ₹800,001 - ₹1200,000 | ₹40,000 (10% of 400,000) |
| ₹12,00,001 - ₹13,25,000 | ₹18,750 (15% of ₹1, 25,00) |
| Tax Payable before Cess | ₹78,750 |
| Health & Education Cess 4% | ₹3150 |
| Total Tax Payable | ₹75,600 |
Rebate applies only if taxable income is ₹12,00,000. So, for a salary of ₹14,00,000, the tax payable is ₹75,600, and the in-hand salary would be ₹13,24,400.
Let’s understand this with a few other salary examples. The chart below shows how Budget 2025 impacts your taxes and overall savings
| Before Budget 2025 | After Budget 2025 | ||
| Salary (in LPA) | New Tax Regime | Revised | Savings |
| 14 | 105,000 | 81,900 | 23,100 |
| 15 | 130,000 | 97,500 | 32,500 |
| 16 | 153,400 | 113,100 | 40,300 |
Note: We are focusing solely on the implications of the new tax regime on in-hand salary. The salary figures used in our calculations already account for deductions such as HRA, Gratuity, EPF, etc., to keep the explanation clear and straightforward.
Benefits of Using a Salary Calculator
Accurate Budgeting
- Estimates Take-Home Pay: Helps calculate your net income after taxes and deductions.
- Realistic Budgeting: Assists in managing monthly expenses and savings effectively.
Informed Decision-Making
- Job Offers and Appraisals: Shows salary structure changes with new compensation packages.
- Financial Planning: Enables decisions based on potential earnings, cost of living adjustments, and tax implications.
Negotiation Leverage
- Clear Breakdown: Provides detailed gross vs. net pay insights.
- Empowers Negotiations: Ensures compensation discussions are based on accurate financial needs and expectations.