GUIDESMONEY MATTERS
5 Easy Steps on How to Calculate Take Home Salary
5 MIN • 
LAST EDITED BY ANOOP MENON ON APRIL 25, 2025.
LAST EDITED BY ANOOP MENON ON APRIL 25, 2025.
GUIDES LAST EDITED BY ANOOP MENON ON APRIL 25, 2025.
As a salaried employee, knowing the answer to "how to calculate take home salary" is extremely important. This is because the take-home pay is what you have left in your hand to spend during the month.
So, it’s essential to understand how to calculate take home salary from your CTC or gross pay, as the case may be.
The take-home pay or the take-home salary is that part of your monthly payment (after deducting taxes, other benefits and any voluntary contributions you may be making). In other words, it is the sum you ‘take home’ and can spend/save/invest during the month.
Naturally, the higher the take-home salary, the better. As it means you will have more money to spend. It improves your liquidity during the month. When negotiating your pay, it is a good idea to ensure that your take-home salary is adequately high.
To determine your net income , which is the amount you receive in your bank account, you can learn how to calculate take home salary from CTC by deducting taxes and other deductions such as EPF and insurance.
Calculating the take-home pay is easy if you know the formula involved and the steps you have to follow to arrive at this number.
Take home salary = Gross salary - (Income tax + Professional tax + EPF contribution)
In other words, it is the difference between the gross salary and all the deductions made from that gross pay. Here’s a step-by-step guide to help you compute the take-home pay.
Calculating your annual gross salary is the first step to computing the take-home pay. The annual gross salary is the aggregate amount of money you receive from your company during the year. It is essentially the sum of your basic salary and all the allowances you receive, without accounting for any deductions.
Typically, this is 12% of the basic salary plus the dearness allowance. Since this is deducted from your gross salary, it will not be a part of your take-home pay.
Please note all these metrics and add them to the annual EPF contribution that is deducted from your take-home pay. The sum of all these parameters will be the deductions you need to account for when calculating the take-home pay.
To do this, subtract the total deductions from the previous step from your annual gross salary. It will give you a yearly take-home salary.
The last step is to divide the total annual take-home salary by 12. It gives the monthly take-home pay.
This will help you understand the process better. Consider the following parameters:
In this case: ₹15,00,000.
Total EPF contribution: ₹72,000.
₹12,500 (i.e. ₹2,500 plus ₹10,000).
The annual take-home salary would be the difference between the gross pay and the total deductions. So, it would amount to ₹14,15,500 (i.e. ₹15,00,000 — ₹72,000 — ₹12,500).
The monthly take-home pay would be the annual take-home pay divided by 12: ₹1,17,958 (i.e. ₹14,15,500 divided by 12).
Getting an idea of how to calculate take home salary, helps make budgeting and financial planning much more manageable.
To calculate your take-home pay, subtract all the deductions applicable to your gross salary (EPF amount, income tax deductions, professional tax & other voluntary contributions). The amount post-deduction gets paid out to you.
To calculate take-home pay from CTC, deduct income tax, professional tax, EPF contribution, ESI contribution, and other deductions from CTC. The formula is Take-Home Pay = CTC - (Income Tax + Professional Tax + EPF Contribution + ESI Contribution + Other Deductions). Note that the calculation may vary based on your contract and tax laws, and CTC may include various components affecting the calculation.
Take-home income is the amount an employee receives after various deductions from their salary, while CTC is the total cost that the employer incurs for the employee, including salary, benefits, and other expenses.
To calculate net take-home salary, subtract various deductions such as income tax, professional tax, EPF contribution, ESI contribution, and other deductions from your gross salary. The resulting amount is your net take-home salary.
