How do I calculate taxable income from CTC?
Table of Contents
How do I calculate taxable income from CTC?
What are the steps to determine slab of your taxable income in India?
- Calculate your gross salary by adding Dearness Allowance, House Rent Allowance, Transport Allowance, Special Allowance to your basic pay.
- Then deduct the exemptions of HRA, professional tax and standard deduction from the gross salary.
Is income tax calculated on basic pay or CTC?
Income Tax, in this case, is deducted at source by the employer and is based on the gross pay of the employee. Also, basic salary of an employee should be at least 50\%-60\% of his/her gross salary.
What part of CTC is taxable?
Basic Pay: This is the primary component of your CTC, also called ‘Basic Salary’. It makes up a major part of your CTC. The basic pay is fully taxable in the tax slab in which your income falls. The higher the basic pay, the higher your tax liability.
Is CTC taxable income?
50,000 from your total income. For example, if your total annual income is Rs. 5,50,000, your taxable income will be considered as Rs. 5,00,000 after applying standard deduction….Example of Salary Components in Your CTC.
| CTC | |
|---|---|
| Components | Amount |
| Basic Salary | Rs 3,00,000 |
| Social allowance | Rs 1,00,000 |
| HRA | Rs 80,000 |
Is CTC same as gross salary?
The employees’ CTC is the gross amount, while the amount of salary one gets to take home is the net salary. In simpler words, gross salary is the monthly or yearly salary before any deductions are made from it.
What salary is taxable in India?
What is the Existing / Old Income Tax Regime?
| Income Range | Tax rate | Tax to be paid |
|---|---|---|
| Up to Rs.2,50,000 | 0 | No tax |
| Between Rs 2.5 lakhs and Rs 5 lakhs | 5\% | 5\% of your taxable income |
| Between Rs 5 lakhs and Rs 10 lakhs | 20\% | Rs 12,500+ 20\% of income above Rs 5 lakhs |
| Above 10 lakhs | 30\% | Rs 1,12,500+ 30\% of income above Rs 10 lakhs |
What are the deductions from CTC?
Gross Salary- Gross Salary is the gratuity and the employee provident fund (EPF) subtracted from the cost to company (CTC). It is that sum amount which is paid before deduction of taxes or other deduction including bonus, over-time pay, holiday pay and other perk.
How is tax calculated on CTC and gross salary?
Tax is calculated on Taxable Income, not on CTC. The gross salary is less than CTC. To arrive at the Gross salary, the Employer’s contribution towards PF and ESIC is deducted from CTC. To arrive at Taxable Income followings are required to be deducted from Gross salary: And on such Taxable Income tax will be computed.
Is there an exhaustive list of CTC components in income tax?
To be honest, answer is simple, Income tax act tells you what is to be taxed and what not. There is no exhaustive list. So, in honesty, the answer depends on the CTC components, their treatment in your inhand salary calculation and the language used to name a component.
What is the CTCTC formula?
CTC = Direct Benefits + Indirect Benefits + Savings Contributions Direct Benefits refer to the amount paid to the employee monthly by the employer which forms part of his/her take-home or net salary and is subject to government taxes. Indirect Benefits refer to the benefits that employees enjoy without paying for them.
What is CTCTC package in salary?
CTC package is a term often used by private sector Indian companies while making an offer of employment. CTC contains all monetary and non-monetary amounts spent on an employee. All the below mentioned are a part of the in-hand salary, and therefore, are a part of the CTC pay as well.