Payroll Calculator
How Payroll calculations are done?
Payroll calculations usually constitute 4 main components – Basic pay, Allowances, Deductions, and IT Declarations.
Gross Pay
Gross Pay is the sum of Basic pay + Allowances.
Net Pay
Net Pay is the difference between Gross Pay – (Deductions + Total TDS). Total TDS is the sum of TDS, Surcharge, Health & Education Cess.
Basic Pay
Basic Pay is 50% of Gross salary (Gross * 0.5)
HRA
The amount received as the HRA from the employer. Actual rent paid less 10% of the basic salary and 50% of the basic salary if staying in a metro city and 40% in a non-metro city.
Provident Fund
PF deduction (Provident Fund) is calculated on 12% of Basic + PF applicable allowances or 15,000, which ever is lower
Employee State Insurance
ESI is calculated on 0.75% of – Gross Pay (Basic and LOP dependent allowances) or 21,000, whichever is lower
Payroll Calculator
Allowances
₹8,000.00
₹8,266.34
Deductions
₹783.65
₹2,400.00
₹157.5
₹200.00
₹36,458.85
Note: For more information on various Income Tax slabs for the above fiscal year, please click here Income Tax Slabs.
Rules for calculating payroll taxes
Old Tax Regime
- Income Tax formula for old tax regime = (Basic + Allowances – Deductions) * 12 – (IT Declarations + Standard deduction)
- Deductions are the sum of PF, ESI, and PT etc.
- TDS is calculated on (Basic + Allowances – Deductions) * 12 – (IT Declarations + Standard deduction)
- Standard deduction (50,000)
- Income Tax formula for new tax regime = (Basic + Allowances – Deductions (ESI)) * 12 – (IT Declarations)
- Only ESI is considered as a deduction.
- Exemptions
- Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
- Standard Deduction (50,000)
- Interest on housing loan (Section 24)
- House Rent Allowance
- Profession Tax
- Children Education Allowance
Note: The taxpayers has the option to either continue with the old tax rates, and exemptions or opt for the new tax regime with lower tax rates by forgoing tax exemptions and deductions.
