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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Everything earned in a month before any deduction: basic, allowances and any variable components. Statutory deductions and taxes are applied to it or to components within it, so it is the figure most rules are anchored to.
Gross salary is the figure payroll works out first each month, before any deduction: earned basic, HRA, allowances, overtime, arrears and variable pay paid that month, after reducing for loss of pay days. Every statutory test then reads from some version of it.
That is where errors start. ESI eligibility is checked on gross wages against ₹21,000, PF is calculated on basic and DA usually capped at ₹15,000, and Professional Tax slabs, which vary by state, also look at gross. Example with illustrative figures: a gross of ₹22,500 that includes a one-time ₹2,000 arrear may need careful treatment under ESI rules on what counts as wages.
The common mistake is confusing monthly gross with annual CTC in offer conversations and payslips. CTC includes employer PF, gratuity provision and insurance, none of which the employee receives in hand, so show both figures clearly on offer letters.
Everything earned in a month before any deduction: basic, allowances and variable components.
Statutory deductions and taxes are applied to it or to components within it, so most rules are anchored to it.
CTC adds the employer's own contributions and other costs on top of gross.
Take-home is gross less the employee's statutory contributions, TDS and other authorised deductions.
Yes. ESI rates are applied to gross, and eligibility uses a ₹21,000 gross monthly threshold.
No. PF uses the PF wage, basic plus DA, not full gross.
Yes, any variable components earned in the month are included.
As defined here it is the monthly figure earned before deduction.
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