Salary Calculator (India)

What is a Salary Calculator?

A salary calculator is a tool that estimates your in-hand salary. It takes your CTC and subtracts various deductions. These deductions include taxes, Provident Fund (PF), and other contributions. The final number is the money you receive in your bank account.

You can use a salary calculator for several reasons:

• Understand your take-home pay: See the exact amount you will receive.
• Compare job offers: Evaluate different salary structures.
• Plan your finances: Budget your expenses based on your actual income.
• Negotiate better: Understand the components of your salary package.

How a Salary Calculator Works

A salary calculator estimates your take-home pay by subtracting deductions from your Cost to Company (CTC). It uses the Indian tax rules for FY 2025-26, which offers two options: the new tax regime (default, with lower rates and fewer deductions) and the old tax regime (higher rates but more deductions). Below, I break down the main salary components and show how they affect your net salary.

1. Cost to Company (CTC)

CTC is the total yearly amount your employer spends on you. It includes:

• Basic salary
• Allowances (like HRA, conveyance)
• Employer contributions (such as Provident Fund, NPS)
• Other benefits (like gratuity)

Example: Suppose your CTC is 6 lakh per year. This covers all these parts.

2. Basic Salary

Basic salary is a fixed portion of your CTC, typically 40-50% of it. It’s important because allowances and deductions (like HRA, PF, NPS) are based on it.

Example: For a 6 lakh CTC, your basic salary could be 2.4 lakh (40% of CTC).

3. Allowances

Allowances are extra payments for specific needs. Common ones are:

• House Rent Allowance (HRA): Helps with housing costs. In the old regime, HRA can be exempt based on rent paid, basic salary, and whether you live in a metro (50% of basic) or non-metro (40%). In the new regime, HRA is fully taxable.
• Conveyance Allowance: Covers work-related travel, often tax-exempt up to 19,200 per year in the old regime.
• Special Allowances: The leftover CTC after fixed components, fully taxable.

Example for a 6 lakh CTC:

• HRA: 1.2 lakh (50% of basic, metro city)
• Conveyance: 19,200 (1,600 per month)
• Special Allowances: 1.9 lakh (remaining CTC after basic, HRA, conveyance, employer PF, NPS)

4. Provident Fund (PF)

Provident Fund (PF) is a retirement savings plan. You and your employer each contribute 12% of your basic salary. Your contribution lowers your taxable income in both regimes, and the employer’s share is part of your CTC.

Example: With a 2.4 lakh basic salary, your PF contribution is 28,800 (12% of basic), matched by your employer.

5. National Pension System (NPS)

Your employer’s NPS contribution (up to 10% of basic salary) is deductible in both regimes under Section 80CCD(2). It’s included in your CTC and reduces your taxable income.

Example: If your employer contributes 10% of 2.4 lakh, the NPS contribution is 24,000.

6. Professional Tax (PT)

Professional tax is a state-level tax on salaried employees, usually capped at 2,500 per year (e.g., 200 per month in Maharashtra, with 300 in the last month).

Example: For a 6 lakh CTC, professional tax is 2,500 annually.

7. Income Tax (TDS)

Income tax, or Tax Deducted at Source (TDS), is based on your taxable income after deductions. The tax slabs for FY 2025-26 are:

New Tax Regime Slabs

• Up to 4 lakh: 0%
• 4 lakh to 8 lakh: 5%
• 8 lakh to 12 lakh: 10%
• 12 lakh to 16 lakh: 15%
• 16 lakh to 20 lakh: 20%
• 20 lakh to 24 lakh: 25%
• Above 24 lakh: 30%
• Rebate: Full tax rebate (up to 60,000) under Section 87A for taxable income up to 12 lakh.
• Standard Deduction: 75,000 for salaried employees.

Old Tax Regime Slabs

• Up to 2.5 lakh: 0%
• 2.5 lakh to 5 lakh: 5%
• 5 lakh to 10 lakh: 20%
• Above 10 lakh: 30%
• Rebate: 12,500 under Section 87A for taxable income up to 5 lakh.
• Standard Deduction: 50,000 for salaried employees.

Deductions

• Old Regime:
  • HRA Exemption: The least of:
    • Actual HRA received
    • Rent paid minus 10% of basic salary
    • 50% of basic (metro) or 40% (non-metro)
  • Section 80C: Up to 1.5 lakh (e.g., PF, PPF, ELSS).
  • Section 80D: Up to 25,000 for medical insurance (50,000 for senior citizens).
  • Section 80CCD(2): Employer’s NPS contribution (up to 10% of basic).
  • Section 80G: 50% of eligible donations, capped at 10% of adjusted gross income.
• New Regime: Only standard deduction (75,000) and employer’s NPS contribution (80CCD(2)) are allowed.

Additional Charges:

• Cess: 4% on income tax in both regimes.
• Surcharge: Applies on incomes above 50 lakh (10-25%).

Calculating Your Take-Home Salary

Let’s calculate the take-home salary for a 6 lakh CTC, assuming you live in a metro city and pay 1.2 lakh annual rent. We’ll show both regimes.

New Tax Regime Example

• CTC: 6 lakh per year
• Components:
  • Basic Salary: 2.4 lakh (40% of CTC)
  • HRA: 1.2 lakh (50% of basic, metro)
  • Conveyance: 19,200 (1,600 per month)
  • Employer’s PF: 28,800 (12% of basic)
  • Employer’s NPS: 24,000 (10% of basic)
  • Special Allowances: 1.68 lakh (remaining CTC)
• Deductions:
  • Employee PF: 28,800
  • Employer’s NPS: 24,000 (deductible under 80CCD(2))
  • Professional Tax: 2,500
  • Standard Deduction: 75,000
• Taxable Income:
  6 lakh – 28,800 (PF) – 24,000 (NPS) – 2,500 (PT) – 75,000 (standard) = 4.69 lakh
• Income Tax:
  • Up to 4 lakh: 0
  • 4 lakh to 4.69 lakh: 69,700 × 5% = 3,485
  • Cess: 3,485 × 4% = 139.40
  • Total Tax: 3,624.40
  • Rebate (Section 87A): 3,624.40 (since taxable income is below 12 lakh)
  • Final Tax: 0
• Total Deductions: 28,800 (PF) + 2,500 (PT) + 0 (tax) = 31,300
• Annual Take-Home: 6 lakh – 31,300 = 5.69 lakh
• Monthly Take-Home: 5.69 lakh ÷ 12 = 47,392 (approx.)

Old Tax Regime Example

• CTC: 6 lakh per year
• Components: Same as above.
• Deductions:
  • Employee PF: 28,800
  • Professional Tax: 2,500
  • Standard Deduction: 50,000
  • HRA Exemption: Least of:
    • 1.2 lakh (HRA received)
    • 1.2 lakh – (2.4 lakh × 10%) = 96,000
    • 2.4 lakh × 50% = 1.2 lakh
    • HRA Exemption: 96,000
  • Section 80C: 28,800 (PF, assuming no other 80C investments)
  • Section 80CCD(2): 24,000 (NPS)
• Taxable Income:
  6 lakh – 28,800 (PF) – 2,500 (PT) – 96,000 (HRA) – 50,000 (standard) – 28,800 (80C) – 24,000 (NPS) = 3.71 lakh
• Income Tax:
  • Up to 2.5 lakh: 0
  • 2.5 lakh to 3.71 lakh: 1.21 lakh × 5% = 6,050
  • Cess: 6,050 × 4% = 242
  • Total Tax: 6,292
  • Rebate (Section 87A): 6,292 (since taxable income is below 5 lakh)
  • Final Tax: 0
• Total Deductions: 28,800 (PF) + 2,500 (PT) + 0 (tax) = 31,300
• Annual Take-Home: 6 lakh – 31,300 = 5.69 lakh
• Monthly Take-Home: 5.69 lakh ÷ 12 = 47,392 (approx.)

Key Notes

• New Regime: Offers no tax up to a taxable income of 12 lakh due to a 60,000 rebate under Section 87A. Only standard deduction (75,000) and NPS (80CCD(2)) are allowed.
• Old Regime: Includes HRA, 80C, 80D, and 80G deductions but has a lower rebate limit of 5 lakh.
• Choosing a Regime: Pick based on your deductions. If you have significant HRA or 80C investments, the old regime might save more. Otherwise, the new regime is simpler.
• Tools: Use online salary calculators on sites like ClearTax or Paycheck.in for a tailored estimate based on your CTC, rent, and investments.

This example shows how a salary calculator works for a 6 lakh CTC under FY 2025-26 tax rules.