What is the difference between gross and net salary

Posted on 04th Jul 2018 | 1053 views

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Gross salary

Gross salary is the total sum of all the components of your salary or remuneration package. Gross salary is mainly the salary which is without any deductions like PF, income tax, medical insurance etc. The gross salary is mentioned in the employers offer letter in the income section which mainly consists of all the elements of the pay package. The sum of all those individual elements on a monthly or yearly basis is the gross salary.The important modules of gross salary include; Basic Salary- This module is the base salary of gross salary which you get, HRA or House Rent Allowance- This component is towards the house rent of any employee & helps in saving the taxes, Leave Travel Allowance- This part of gross salary covers some travel costs of the employee & helps in tax exemption, Transportation Allowance- This covers the costs required to travel from home to work & work to home, Retrials- Also referred as superannuation, these help as a pension for employee post-retirement, Bonus- Annual bonuses or Performance bonuses are also a part of the gross salary, Others like Medical allowance, Provident Fund (PF) etc.

Net Salary

Gross salary meaning

Gross salary meaning is the amount of salary paid to the employee after adding all the allowances and benefits before deducting any tax. On the other hand, Net Salary is what is left in the salary after deductions have been made. Gross salary means the salary which you will see every month before any deduction. Hence major Difference between gross and net salary can be described as the gross salary is the amount of salary after including all allowances and benefits but before subtracting any tax. Gross Salary includes benefits like Medical Insurance, Free Meal, and allowances like Conveyance Allowance, Dearness Allowance, HRA, Medical Allowance and Special Allowance etc. and Net salary is the amount that employee take-home salary. Net Salary is equal to gross salary minus all deductions like ESI, EPF, Professional Tax and Income Tax (TDS). Net Salary in another word can be said as take-home salary.

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