1. Basic salary

Basic salary is nearly 40-50% of the CTC. It is the base amount of the salary on which further additions and deductions are dependent.

2. Special allowance Special allowance is the additional amount paid to employees for meeting different expenses like attire, food, academic allowance, internet subscription, phone, books, stationaries, etc.

The special allowance varies from a different company, and it is fully taxable in the hands of employees.

3. House rent allowance (HRA)

House rent allowance is a benefit that is received from the employer to meet rent expenses incurred by employees. In case, employees do not live in rented accommodation then HRA is fully taxable in the hands of the employee. You can use ET money’s HRA calculator. to estimate the total taxable HRA

4. Leave travel allowance (LTA)

As the name suggests, Leave Travel Allowance (LTA) is a benefit given to employees to cover travel expenses while they are on leave. It covers the train or bus fares or airfares incurred on travelling with or without family.

5. Bonus

Bonus is an additional payment linked with the employee's performance. It is fully taxable to the employees, and it is generally received at the end of the year.

6. Employee Provident Fund (EPF)

Employee provident fund or EPF is a saving scheme which is monitored by the central government. The purpose of EPF is to provide sufficient retirement funds to employees.

As per this scheme, nearly 12% of an employee’s basic salary is contributed to the provident fund. And also the same contribution is matched by the employer. Currently, the provident fund is offering an 8.1% return. This rate keeps changing as it is decided by the government on yearly basis.

7. Professional Tax

Professional tax is a direct tax imposed by the state government on employees and other individuals providing professional services. The rate of professional tax varies from state to state. However, the maximum amount of professional tax is capped at Rs 2,500 per year.

8. Gratuity

The gratuity is an employee benefit payable when you either retire from the company or quit after 5 years of service. A fixed percentage of your salary is calculated and deposited in the gratuity account. The final gratuity amount is based on your last drawn salary. For the calculation of gratuity, you can refer to ET money’s gratuity calculator tool.

Gratuity = (Basic salary + Dearness allowance) × 15/26 × No. of Years of Service

9. Gross Salary

Gross salary is the total amount of money an employee earns before any deductions or taxes are taken out.

Gross Salary = Cost to Company (CTC) - Employer's PF Contribution (EPF) - Gratuity

10. Take-Home Salary

Take-home salary is the amount of money an employee receives after all deductions, including taxes and other withholdings, have been subtracted from their gross salary. It's the actual income that an employee can use for their personal expenses.

Take-Home Salary = Gross Salary - Deductions (Income Tax + Employees PF Contribution (PF) + Prof. Tax)