Gross pay is the total money an employee earns before taxes and other deductions are taken out. To calculate gross pay, you will need to know the employee's hourly wage or salary, as well as the number of hours they worked (for hourly employees) or their annual salary (for salaried employees). Based on this knowledge you can use the formula for gross salary calculation to determine the exact figure (formula for gross salary shared further in the blog).
It is important to note that for salaried employees, you would need to divide the annual salary by the number of pay periods in a year to get the gross salary for that pay period.
Gross salary = sum of all fixed, variable, direct and indirect salary components that are paid to the employee.
Typically, on your payslip the gross salary components are listed on the left hand side column.
If you are wondering how to calculate the gross salary using the CTC, you can use this formula for gross salary calculation as below:
Simply add the tax deductions (income and professional tax) and all contributions to the employee’s retirement savings (provident fund, gratuity, pension plan, superannuation, etc.). Now subtract the result from the overall CTC to get the gross annual gross salary for the employee. Divide the result by 12 to get the monthly gross.
Annual gross salary is the total amount an employee earns in a year, including fixed components like basic pay and allowances such as HRA, as well as variable elements like bonuses and incentives, and indirect benefits such as vouchers and perks. It can be calculated as CTC minus tax deductions and retirement contributions made by the employer.
Gross income is the total income from various sources after deducting expenses and exemptions. In the case of gross salary, it includes taxes and retirement fund contributions.
To calculate annual gross salary from net salary, you need to know the tax deductions and contributions to employee retirement savings. Subtract these from the net salary to get the gross salary.
The formula for calculating gross salary in Excel is the sum of all fixed, variable, direct, and indirect salary components that are paid to the employee.
For example, if an employee's basic pay is ₹3,00,000 per year and they receive an HRA of ₹1,50,000 per year, their gross salary would be the sum of these two components, which would be ₹4,50,000 per year.