Net Salary and Gross Salary
1. What do you mean by Gross salary?
Gross salary refers to the total amount released before any kind of deductions by the employer of a company towards employees.
2. What do you mean by Net Salary?
Net salary refers to the amount that salaried individuals receive after various kind of tax deductions and contributions (PF).
3. What are the components of Gross salary?
Various components of the gross salary are House Rent Allowance, Conveyance Allowance, and Medical Allowance etc.
4. What are the components of Net salary?
The components of net income include Income Tax, Professional Tax, Provident Fund, Pension, etc.
5. Which is more net pay or gross pay?
Typically, Gross pay is more than net pay as it consists of the employee’s total salary before any deductions. Since net pay is the payable salary, post-tax and other deductions, In general it tends to be lower than gross pay.
6. Does gross salary mean in hand salary?
Gross salary is the amount that remains after subtracting gratuity as well as EPF from the CTC.
Difference between Net Salary and Gross Salary
Net Salary and Gross Salary: Gross salary is the total amount received by an employee without any tax deductions whereas Net salary is the total amount of money that an individual takes home after all kinds of deductions have been taken out. You can calculate it by the following formula given by Net Salary = Gross Salary – All kinds of deductions such as income tax, pension, etc. You can say “Net salary is the take-home salary”.
A salaried individual must have come across gross Pay and net pay terms. For new joiners Managing payroll becomes an overwhelming task. So having an idea about these terms helps in negotiating as well as avoiding HR mistakes that startups generally make.
In this article, we have covered Net pay and gross pay, different types of salary, payroll, and income, and formulas for calculating your in-hand salary, and more.