Your Complete Guide to Salary Structure and Payroll Components in India
Today’s theme: Salary Structure and Payroll Components in India. Dive into a friendly, practical tour of Indian paychecks—what builds your CTC, what shapes your take‑home, and how to make smarter money decisions. Read on, share your questions, and subscribe for more payroll clarity.
CTC, Gross, and Net: Making Sense of Indian Paychecks
Cost to Company is the employer’s total annual spend on you, not your monthly bank credit. It usually bundles fixed pay, variable pay, employer PF, gratuity accrual, medical insurance premiums, and sometimes retention bonuses. Always compare offers line by line, and subscribe to get our CTC checklist.
CTC, Gross, and Net: Making Sense of Indian Paychecks
Gross pay reflects monthly earnings before statutory and tax deductions—basic, HRA, allowances, bonuses, and overtime. Net pay arrives after TDS, EPF, ESI, and Professional Tax. For example, a gross of ₹80,000 may net around ₹62,000 depending on exemptions and deductions. Share your tips on boosting take‑home ethically.
Core Salary Components: Basic, HRA, DA, and Special Allowance
Basic is often 35–50% of CTC in private companies and anchors PF, gratuity, and HRA calculations. A higher basic improves social security but can reduce take‑home due to larger statutory deductions. Aim for balance aligned with life goals; tell us how you structure yours and why.
EPF Contribution and Limits
Employees typically contribute 12% of basic plus DA to EPF; employers match 12%, with a portion going to EPS subject to the ₹15,000 wage ceiling. Your UAN helps track balances across jobs. EPF qualifies under Section 80C, and long‑term compounding is powerful—subscribe for our EPF growth planner.
ESI Eligibility and Care
ESI applies when gross wages are within the statutory threshold (currently ₹21,000). Employee contribution is 0.75% and employer 3.25%. A teammate once sprained an ankle, used their IP number, and had quick cashless support. If you recently crossed the threshold, check status and share how your payroll handled it.
Gratuity and Bonus Basics
Gratuity is payable after five years of continuous service, generally calculated as 15/26 of last drawn basic plus DA per completed year. The Payment of Bonus Act sets eligibility and ranges for bonus percentages. Keep records of joining dates and wage particulars; ask HR early during transitions and tell us your timelines.
The new regime offers lower slab rates with fewer exemptions, while the old regime allows HRA, LTA, and many deductions. Sneha switched mid‑year after simulations showed better take‑home under the new regime. Run your numbers early, choose wisely on your portal, and comment which regime works for you.
Taxes on Salary: Choosing Regime, TDS, and Year‑End Actions
Salaried taxpayers get a standard deduction of ₹50,000. Under the old regime, Section 80C (₹1.5 lakh), 80D for health insurance, and 80CCD(1B) for NPS (₹50,000) can reduce taxable income. HRA and LTA need policy alignment and proofs. Subscribe for our deduction organizer template.
Taxes on Salary: Choosing Regime, TDS, and Year‑End Actions
Leave Travel Allowance covers domestic travel for you and family, typically twice in a four‑year block, with economy tickets or eligible train fares. Akash saved receipts from a Chennai trip and smoothly claimed LTA during the window. Set reminders for blocks and comment where you plan to go next.
Allowances, Reimbursements, and Perquisites That Influence Take‑Home
