Salary FAQ
- Vishakha Pinge
What is salaried income?
A team member's recurring income from an employer in cash, kind, or as a facility is considered a salary.
What are allowances?
Allowances are fixed periodic amounts, apart from salary, paid by an employer to the team member—for example - telephone allowance, transport allowance etc.
What are the different types of allowances?
There are generally three types of allowances for the Income-tax Act.
Taxable allowances
Fully exempted allowances
Partially exempted allowances
Is pension income taxed as salary income?
Yes. However, the pension received from the United Nations Organisation is exempt.
What is Axelerant's annual CTC breakdown?
For India-based folks, visit the Annual CTC Breakdown spreadsheet.
For employees in India
Cost To Company
The Cost to Company (CTC) is the amount that an employer expends on hiring the service of a team member. The CTC includes all the elements of a salary structure - Basic Salary, House Rent Allowance (HRA), Basic Allowance, Travel Allowance, Medical, Communication, Provident Fund, Pension Fund, etc., incentives or variables pay. CTC and take-home salary vary as CTC represents direct, indirect, and savings contributions.
Direct benefits may include basic salary, conveyance, medical, house rent, communication, etc.
Indirect benefits include food coupons, income tax savings, subsidized meals, etc.
Savings contributions include - Superannuation Benefits, Employee Provident Funds, Gratuity, etc.
Gross Salary
Subtract taxes, gratuity, employee provident fund (EPF), and other deductions from Cost to Company (CTC); the amount you get is your Gross Salary. You earn the amount before deducting income taxes and other deductions such as bonuses, overtime pay, holiday pay, etc.
Basic Salary
Your basic salary is one of the components of your salary and is mentioned in the salary breakup/structure. For India, the basic wage is one of many salary components. For others, typically, the basic salary is the salary itself.
Net Salary or Take Home Salary
As the name suggests, take-home salary is the monthly amount credited to your salary account. The employer gives it after deducting taxes and other deductions such as public provident fund, professional tax subtraction, etc.
These India-based definitions are sourced via https://timesofindia.indiatimes.com/business/faqs/income-tax-faqs/what-is-difference-between-basic-salary-take-home-salary-gross-salary-and-ctc/articleshow/62133784.cms.
For employees outside India
Gross pay or salary is the money you receive before any taxes and deductions are taken out.
Employee pre-tax deductions such as health insurance are subtracted from gross pay. Then, federal, state, and local taxes are calculated, depending on where you worked. After taxes are calculated, post-tax deductions such as garnishments are subtracted, and reimbursable expenses are added.
To compute net pay, subtract voluntary and mandatory deductions and taxes from gross salary.
These Outside India definitions are sourced via https://docs.gusto.com/embedded-payroll/docs/payroll-fundamentals and are predominantly used in countries like the United States.