Take-Home Salary is an employee’s total salary after all necessary allowances are accounted for, and the deductions are withdrawn.
The formula for the same, being used in our calculator is;
Take-home salary = gross salary - [12% pf contribution(Employee) + LWF(Employee) + ESIC (If Applicable)]
You must be familiar with the components of your salary, and its calculations are explained below. Starting with the basic salary or base pay, is the remuneration an employee earns before any additions or deductions are made to it. The formula to calculate basic salary is;
Basic Salary = 50% of the Cost to Company (CTC)
The next component in our calculator is HRA – House Rent Allowance, a general allowance calculated by us. Allowances differ from company to company. The formula for calculating HRA would be;
HRA = 40% of the Basic Salary
Moving ahead, the next component in calculating our take-home salary is the LWF – Labour Welfare Fund. To impart social security to workers, the government introduced the Labour Welfare Fund Act. The act is exercised only in 16 out of the 36 states and union territories in India. LWF does not apply to all categories of employees working in an organization.
- Haryana = ₹50 by the employers and ₹25 by the employees, Total = ₹75
- Delhi = ₹2.25 by the employers and ₹0.75 by the employees, Total = ₹3
- Karnataka = ₹40 by the employers and ₹20 by the employees, Total = ₹60
The next component in our take-home salary calculator is Gross Salary. Gross Salary is the amount of remuneration after adding up all the allowances or bonuses but before deducting any of the tax. The formula for the same is;
Gross Salary = Basic Salary + HRA + Allowances/Bonuses
After the Gross Salary is computed, we’ll move toward the calculations for PF or EPF. It’s a government-acknowledged savings scheme for employees. The PF interest rates are established every year by the EPFO (Employees Provident Fund Organisation). The formula to calculate EPF is;
PF contribution made from employee & employers end = 12% of basic salary (if basic salary is less than ₹15000)
Salary greater than ₹15000 would have a fixed deduction amount that is = ₹1800.
The next component is ESIC – Employee State Insurance Corporation. The scheme provides employees financial protection in case of any unavoidable health-related eventuality. The said scheme offers medical benefits, unemployment allowance, maternity benefits, disability benefits, etc. Employees’ State Insurance Scheme is calculated on the Gross salary;
ESIC = Employees with a salary of ₹21000 or less than ₹21000 are accountable for paying the ESIC amount.
3.25% of CTC is the employer's contribution and 0.75% of CTC from the employee.
All the components of the Zimyo take-home salary calculator are explained. Now you can enter your salary details and calculate your salary in-hand within seconds.
For employee salary breakup format and structure, you can visit – Guide to Salary Slip Format in India
To know about the compliance deductions, you can visit – Updated Statutory Compliance Checklist in 2022