Payroll & Salary Calculator

CTC (Cost to Company) = Gross Salary + Employer PF (12%) + Gratuity + Other benefits. Gross Salary = Basic + HRA + Allowances (before deductions). In-Hand Salary = Gross Salary minus Employee PF (12%) minus Professional Tax minus TDS. Example: ₹10L CTC → Gross ₹9L (after employer PF ₹108k) → In-Hand ₹7.2L (after employee PF ₹108k, PT ₹2.5k, TDS ₹30k). CTC includes employer contributions YOU never receive. Gross is what's on paper. In-Hand is what hits your bank account.

EPF = 12% of (Basic Salary + Dearness Allowance). Both employee and employer contribute 12% each. Employee contribution: Deducted from salary (reduces in-hand). Employer contribution: Added to CTC, goes to your EPF account. Maximum cap: ₹15,000 Basic salary (₹1,800/month each). Above ₹15k Basic → 12% of ₹15k only OR opt for VPF (Voluntary PF). Example: Basic ₹20k → Employee PF ₹1,800, Employer PF ₹1,800 (NOT ₹2,400 each). You can withdraw EPF after 2 months unemployment or at age 58. Earns 8.15% annual interest (tax-free).

Professional Tax = State-level tax on employment income. Varies by state: Maharashtra/Karnataka/Gujarat: ₹2,500/year (₹208/month). Tamil Nadu: ₹2,400/year. Delhi/UP/Haryana: No PT. Telangana: ₹2,500/year. West Bengal: ₹2,500/year. Calculated monthly based on gross salary slab. Example Maharashtra: Gross greater than ₹10k/month → PT ₹200/month. Gross ₹7.5k-₹10k → PT ₹175/month. Deducted from salary (reduces in-hand). Employer deposits to state government. Section 16(iii): PT is tax-deductible (reduces taxable income).

Gross Salary = Basic + HRA + Special Allowance + Transport + Medical + LTA + Performance Bonus. Typical breakdown: Basic (40-50% of gross), HRA (40-50%, taxable unless rent paid), Special Allowance (remaining portion, fully taxable), Transport/Conveyance (₹1,600/month tax-free), Medical Allowance (₹15k/year tax-free), LTA (Leave Travel Allowance, tax-free if actual travel). Example: ₹50k gross → Basic ₹20k (40%), HRA ₹15k (30%), Special ₹12k, Transport ₹1.6k, Medical ₹1.4k. CRITICAL: Higher Basic = Higher PF deduction (bad for in-hand, good for retirement). Lower Basic = Lower PF, Higher in-hand (bad for retirement).

Strategies: (1) Increase tax-free allowances (Transport ₹1,600, Medical ₹1,250/month), (2) Reduce Basic salary component (lower PF, higher in-hand), (3) Claim HRA exemption (provide rent receipts), (4) Utilize Section 80C (₹1.5L deduction → Save ₹46,500 tax), (5) Section 80D health insurance (₹25k-₹75k deduction), (6) NPS (₹50k extra deduction under 80CCD). Example: ₹10L gross → Basic ₹4L (low PF ₹48k vs ₹1.08L if ₹9L Basic) → In-hand increases ₹60k/year. Trade-off: Lower PF now = Less retirement corpus (₹60k less annually compounds to ₹50L less in 30 years at 8%). Optimize for current needs vs long-term security.

Section 80C (₹1.5L): EPF, PPF, ELSS, Life insurance, Home loan principal, NSC, 5-year FD, tuition fees. Section 80D (₹25k-₹75k): Health insurance for self (₹25k), parents (₹25k or ₹50k if 60+). Section 80CCD(1B) (₹50k): NPS additional deduction. Section 24(b): Home loan interest (₹2L deduction). Section 80E: Student loan interest (unlimited). HRA Exemption: Least of (Actual HRA received, 50% of Basic for metro/40% non-metro, Rent minus 10% of Basic). Example: ₹12L taxable income → Use ₹1.5L (80C) + ₹50k (NPS) + ₹50k (80D) → Taxable ₹10.5L → Save ₹62,400 tax (30% bracket). Submit investment proofs to employer to reduce monthly TDS (get more in-hand monthly vs lump sum refund).

Gratuity = (Last Drawn Salary × Years of Service × 15) / 26. Eligibility: 5+ years continuous service with same employer. Last Drawn Salary = Basic + DA (exclude allowances). Maximum: ₹20 lakh. Tax-Free: Up to ₹20L (if 5+ years service). Example: 10 years service, ₹30k Basic → Gratuity = (₹30k × 10 × 15) / 26 = ₹1.73L. 15 years, ₹50k Basic → ₹4.33L. Gratuity paid on: (1) Retirement (58+ years), (2) Resignation (5+ years), (3) Death/disability (no 5-year rule). CRITICAL: Gratuity is part of CTC but you don't receive it monthly—only as lump sum on exit. Resignation before 5 years → NO gratuity.

NPS (National Pension System) = Government retirement scheme. Benefits: (1) Section 80CCD(1): ₹1.5L within 80C limit, (2) Section 80CCD(1B): Additional ₹50k deduction (total ₹2L tax savings), (3) Low expense ratio (0.01%), (4) Employer contribution (up to 14% of Basic) tax-deductible. Returns: 9-12% historically (equity + debt mix). Lock-in: Till age 60 (can withdraw 60%, remaining 40% annuity). Tax on withdrawal: 60% withdrawal tax-free, 40% annuity taxable. Example: ₹30L salary, contribute ₹50k/year → Save ₹15,600 tax (30% bracket) + Build ₹22L corpus in 20 years (at 10% CAGR). Downside: 60-year lock-in, 40% forced annuity (low returns 6-7%). Verdict: Contribute ₹50k for tax benefit, invest rest in equity mutual funds (higher flexibility).

Employer's Total Cost = CTC + Bonus + ESOP + Office Infrastructure. CTC breakdown: Gross Salary (80-85%), Employer PF (12% of Basic, ~9% of CTC), Gratuity provision (4.81% of Basic, ~2% of CTC), Insurance (group health, term life ~2-3%). Example: ₹10L CTC → Gross ₹9L, Employer PF ₹1.08L, Gratuity ₹48k, Insurance ₹20k → Total employer cost ₹11.56L. Employee receives: In-hand ₹7.2L + Employee PF ₹1.08L (owned by you) = ₹8.28L value. Gap: ₹3.28L (employer taxes, insurance you may not use). CRITICAL: When negotiating salary, ask for 'CTC' OR 'Fixed component' (gross). CTC inflated by employer contributions. ₹10L CTC ≠ ₹10L cash value to you.