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Gross Salary: Components, Benefits & Calculation Process Explained

What Is Gross Salary?

What Are the Components of Gross Salary?

 

The components of gross pay are mentioned in the following table.

Components With Direct Benefits

Components With Indirect Benefits

Basic salary

Performance linked incentives or bonus

Dearness allowance

Overtime payments

House rent allowance (HRA)

Accommodation provided by the employer

Leave travel allowance (LTA)

Utility bills such as electricity and water paid by the employer

Telephone or mobile phone allowance

Arrears of salary

Conveyance allowance

Meal coupons

Special allowances

Health care costs

Direct Benefits Under Gross Pay

Indirect Benefits Under Gross Pay

How to Calculate Gross Salary?

 

To understand the gross pay better, check the example below.

For instance, mentioned below is Arjun’s CTC.

Components of Salary

Yearly Amount (in ₹)

CTC

7,00,000

Basic Pay

5,00,000

Travel Allowance (TA)

50,000

House Rent Allowance (HRA)

45,000

Medical Allowance

45,000

Leave and Travel Allowance (LTA)

60,000

Provident Fund Contribution (PF)

84,000

Gratuity

29,629

Here, Arjun's CTC is the sum of all the salary components listed above, which amounts to ₹7,00,000. To arrive at Arjun's gross income, the PF contribution and gratuity will get deducted from CTC.

So, according to the gross salary formula:

Gross Pay = ₹7,00,000 - (₹84,000 + ₹29,629) = ₹5,86,371

So, this is how you can calculate your gross salary. We are sure that the above information has given a clear picture about this component of salary. Knowing about the various components of your salary will help you understand your savings, net income, etc. and manage your finances accordingly.

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