Take home Salary: How Does It Work? 


What is your take-home pay?

After deducting all deductions from his package or cost to the company, the money received by an employee is referred to as his take-home pay. The formula for calculating take-home pay is given below; further, you can set a generalised format in your Khatabook

Take-Home Salary = Basic salary   Allowance – Deductions.


Allowances differ from one company to the next. Some of the most well known and vastly used Allowances are:

Allowance for Dearness

Allowance for House Rent

Allowance for Conveyance

Allowance for Leave Travel

Allowance for Medical Care

Any other allowance that your employer deems appropriate.


Typically, the deductions are as follows:

EPF – Employee Provident Fund contribution Gratuity Provident Fund contribution Professional Tax (subject to state) and Income Tax

Salary In-hand

Now that we have learned more about the salary pay calculator let’s discuss what we mean by the term in-hand salary. It is the take-home pay, which is normally the amount reported after all deductions have been made.

Monthly Gross Income – Income Tax – Employee PF – Other Deductions.

The amount of these deductions will vary depending on the cost to the company. The main salary deductions are provident fund, income tax, professional tax.

How to Determine in Hand Salary as per CTC using In hand salary calculator

Deduct the employees Provident fund and Gratuity from the cost to the company to arrive at the Gross Salary.

Calculate your taxable income by deducting the necessary amounts from your overall income.

Income tax is calculated by applying the applicable slab rate to the taxable income.

Finally, compute the take-home pay.

How can you enhance your take-home pay?

The contents of your take-home package will remain largely unchanged. So, how do you go about increasing your take-home pay?

No, it is not through bargaining with your human resources department but rather through effective tax planning.

The variable component is the income tax deduction. It can also be changed with effective tax planning to reduce your tax liability.

Here are some ideas for increasing your take-home pay.

Users can lower their income tax burden by investing in various tax-exempt products.

For example, you can claim an 80C deduction of up to Rs. 150000 by investing in securities such as Term Insurance, Equity Linked Mutual Funds, Fixed Deposit, Life Insurance, National Savings Certificates, and so on.

Furthermore, you can claim medical expenditures or the premium paid for a mediclaim policy as a deduction under section 80 D of Rs 15000 over and above Rs 1.5 Lakhs.

What Is the Distinction Between Gross and Net Salary?

Gross salary is the amount finalised after adding all allowances and benefits, but before reducing any tax; however, net salary is the amount that an employee receives. The gross salary includes benefits such as house rent allowance, conveyance allowance, medical allowance, etc. Net Salary –  Gross Salary reduced by all deductions such as income tax, pension, PT, and other items. Take-home pay is another term for net salary.


Net salary, also known as Take-Home Salary, is the amount of money an employee receives after deducting taxes and other expenses. It is the in-hand amount after subtracting Income Tax at Source and other deductions as specified by the relevant company. You can now easily calculate your in-hand salary after reading this article through in hand salary calculator through various online platforms such as Khatabook. 


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