How do I use the ClearTax salary calculator?

What is salary ?

The regular payment from the employer to the employee for work is called salary. The employment contract would set wages, and payment would generally be made every month. The components of the salary structure are:

Basic salary: It is the basic income of the employee and amounts to around 40% 50% of the total salary. The employer pays the employee for her skills, experience, and qualifications. Base salary is an integral part of the CTC (Cost To Company) package.

House Rent Allowance (HRA): It is the component of the salary that the employer offers to employees who live in a rented apartment. The housing rental subsidy or HRA is partially or completely tax-free in accordance with Section 10 (13A) of the Income Tax Act. However, the HRA is fully taxable if you do not live in a rental apartment.

Vacation Travel Allowance (LTA) - The employer grants the employee a lump sum for travel expenses, known as the Vacation Travel Allowance. Employees must present proof of travel to be eligible for the grant. An employee can claim the LTA exemption in accordance with Section 10 (5) of the Income Tax Act.

Special Allowance: The component of your pay structure known as the Special Allowance is fully taxable on your salary. Bonus

: The employer may pay the employee a performance incentive known as a bonus. It is part of the gross salary and is fully taxable in the hands of the employee.

Employee contribution to the pension fund: Both the employer and the employee pay 12% of the employee's basic salary to the EPF or the employee's pension fund each month. The contribution made by the employee to the EPF is deductible under Section 80C of the Income Tax Act of 1961.

Labor Tax: The labor tax is the labor tax collected by the state. The state can collect a maximum of Rs 2,500 as an occupational tax in a fiscal year.

What is a salary calculator?

The Salary Calculator is a simulation that calculates your take-home pay. It is the total salary that an employee receives after all necessary deductions. The salary calculator consists of a formula field in which you enter the cost to the company (CTC) and the bonus contained in the CTC.

Wage calculator shows deductions such as employer and employee pension fund, labor tax, employee insurance, and carryover salary.

How do salary calculators work?

To calculate take-home pay, you must enter the cost of the business (CTC) and the bonus, if applicable, as a fixed amount or as a percentage of the CTC.

For example, your cost to the business (CTC) is Rs 8 lakh. The employer gives you a bonus of Rs 50,000 for the tax year. His total gross salary is Rs 8,000,000 - Rs 50,000 = Rs 7.50,000 (the bonus is deducted from the cost of the business).

Gross salary = Rs 8,000,000 - Rs 50,000 = Rs 7.50,000.

Then you will deduct the business tax of Rs 2,400 per year (this is the business tax in the state of Karnataka). Then deduct the employer and you (employee) contributions to the Employee Provident Fund (EPF).

You must calculate the EPF contribution up to a maximum salary limit of Rs 15,000 per month. Equivalent to 12% of Rs 15,000 = Rs 1,800 per month or Rs 21,600 per year.

So you have 21,600 rupees as the annual employee contribution to the EPF and a similar contribution of 21,600 rupees from the employer to the EPF. (You have 8.33% of the employer's contribution that is diverted to the company's pension plan). He also has an annual deduction of Rs 3,000 for employee insurance.

Total deductions = professional tax + EPF (employee contribution) + EPF (employer contribution) + employee insurance. 4,444 total deductions = 2,400 rupees + 21,600 rupees + 21,600 rupees + 3,000 rupees = 48,600 rupees.