Take home salary is the net salary or the part of your salary that can be taken home for your use for that particular financial year. This can be assessed using a Net Salary Calculator UK.
Below are the steps to calculate the salary in-hand using a Net Salary Calculator UK:
Begin with the Gross Salary calculation-Your basic salary or your CTC is not your Gross Salary. It is actually the amount obtained by deducing the EPF- the Employer’s Provident Fund and gratuity from CTC-Cost to Company.
Gross Salary= CTC-EPF-Gratuity
Your gratuity is calculated based on the following equation:
Number of Years of Servicex(Basic salary + Dearness allowance)x15/26
Dearness allowance of the above equation is the adjustment of cost of living allowed payabel to PSU-Public sector employees, Government employees and Pensioners in India, Bangladesh and Pakistan. It is evaluated as a percentage of basic salary of a Citizen to mitigate the effect of inflation upon individuals. This allowance is generally zero.
So the above equation for the gratuity each year is = 1xBasic Salary (Monthly) X 15/26
Assess the taxable income-This income is obtained by deducing HRA- House Rent Allowance, Medical Insurance, Tax free Allowance, Leave Travel Allowance(LTA) Professional Tax and Tax Saving Investments.
Taxable Income = Gross Salary – Employee’s PF Contribution(PF)/PPF investment – HRA – Tax free Allowance – LTA – Tax Saving Investments – Medical Insurance Other Deductions.
Exemption of HRA are on 3 grounds-
- Received amount from the employer as the HRA
- Rent paid minus ten percent of the basic salary
- If residing in a metropolitan city then 50 percent of the basic salary and if residing in a non-metropolitan city 40 percent of the basic salary.
Income tax calculation-Based on the budget of that particular financial year, income tax payable is calculated. This can be done by a tax analyst or a tax calculator. Certain investments can save you from a part of tax payable. A tax analyst or a tax calculator will suggest you various investment recommendations.
Evaluate the Take home salary-Professional tax differs from state to state. However, a professional tax is not very prominent.
The below equation gives the take home salary:
Take Home Salary = Gross Salary – Employee’s PF Contribution(PF) – Income Tax -Prof. Tax.
Fill in the input specified with the precise values that can be obtained from the payslip into net salary calculator UK to obtain the precise amount of take home salary. When input is not placed, approximate figures on plenty of parameters are filled in and eventually an accurate amount may not be obtained.
Take home salary can be raised in some ways which can be applied as and when feasible by the employee. Take home salary can be increased by adjusting W-4 Exemptions, requesting for a bonus, raise or a promotion, reevaluating deductions on payroll, opening a flexible spending account, working overtime or cash out PTO or Temporarily Pause 401(k) Contributions. The net salary calculator takes in all the values and performs all the deductions and exemptions and provides the net salary amount for an individual.
