PART A: Understanding and Using the CTC Calculator Effectively

1. What is a CTC Calculator?

A CTC Calculator is a tool that breaks down the Cost to Company (CTC) into its detailed components such as Basic Salary, HRA, LTA, Other Allowance, PF, ESIC, Gratuity, Bonus, PT, and Net Take Home Pay. Instead of looking only at a lump sum annual package, the calculator helps employees and employers see the real salary breakup:

• What is Gross Salary?

• What is Net Take Home (In-hand)?

• What are employer’s additional costs?

2. Why is it Important?

1. Transparency – Employees know exactly how much will come in-hand vs deductions.
   
   

2. Compliance – Ensures salary breakup follows Minimum Wage Act, PF rules, ESIC eligibility, and state-wise PT laws.
   
   

3. Negotiation – Candidates can compare offers beyond just “CTC numbers”.
   
   

4. Planning – Helps employees calculate savings, tax liability, and retirement contributions (PF, NPS).
   
   

5. Audit-Proofing – Employers avoid risks of underpaying statutory components like PF or Bonus.

3. How is this Quikchex Calculator Different from Others Online?

Most online calculators are simplistic, they only show a rough breakup of CTC into Basic, HRA, and Other Allowance.

⚡ This calculator is different because it:

✅ Embeds state-wise PT slabs (e.g., Maharashtra, Karnataka, Telangana).

✅ Applies PF logic correctly (cap at ₹15,000 or not, as per toggle).

✅ Auto-calculates ESIC (both employee and employer) when Gross ≤ ₹21,000.

✅ Includes Gratuity (4.81%) and Bonus (8.33%) correctly.

✅ Respects Minimum Wage compliance by auto-adjusting Basic.

✅ Provides toggle options for input (Monthly vs Annual, Gross vs CTC).

✅ Shows a clear split of:

• • Gross Salary [A]

  • Deductions [B]

  • Employer Contributions [C]

  • Net Take Home [A – B]

  • CTC [A + C]

In short, it’s not just a calculator. It’s a compliance-ready, real-world payroll tool.

4. Step-by-step guide with examples:

1. Choosing Input Mode:

   • Toggle between Monthly vs Annual and Gross vs CTC.

   • Example: If you select Monthly + Gross, entering ₹50,000 means gross monthly salary, and employer contributions are added on top.
     
     

2. Setting Percentages & Allowances (Explained in Part B of this Blog)

   • Select State to know the state applicable PT automatically

   • Enter required Basic % of CTC/Gross → default set 50%. Typically, between 40% to 60%

   • Enter required HRA % of Basic → default 50%. Typically, between 40% to 50%

   • Enter required LTA % → 10% of Basic (customizable). Typically, between 10% to 20%
     
     

3. Enabling Statutory Components (Explained in Part B of this Blog)

   • PF – explain cap at ₹15,000 if ticked.

   • ESIC – auto applies if Gross ≤ ₹21,000.

   • Gratuity & Bonus – optional but enabled by default.
     
     

4. Understanding Output Tables

   • Fixed components (Basic, HRA, LTA, Other Allowance)

   • Deductions (PF Employee, ESIC Employee, PT, NPS Employee)

   • Employer contributions (PF Employer, ESIC Employer, Gratuity, Bonus, NPS Employer)

   • Summary (Gross, Net Take Home, Total CTC)

PART B: Complete Guide to Salary Structure & Allowances in India

Introduction

When employers present a Cost to Company (CTC) to employees, it includes multiple salary components and statutory obligations. Understanding each allowance, deduction, and contribution is crucial both for compliance and for transparency with employees. This guide explains the key salary components, allowances, and rules, along with why Minimum Wages matter.

1. Understanding CTC vs Gross vs Net Salary

• CTC (Cost to Company): Total annual spend by the employer, including fixed salary + employer contributions (PF, ESIC, Gratuity, Bonus, etc.)
  
  

• Gross Salary: Fixed salary components (Basic, HRA, Allowances) before deductions.
  
  

• Net Take Home (In-Hand): Gross Salary – Employee deductions (PF Employee, ESIC Employee, PT, Income Tax)

2. Key Salary Components & Allowances

2.1 Basic Salary

• Usually 40–60% of Gross/CTC.

• Forms the base for calculating PF, ESIC, Bonus, and Gratuity.

• Must comply with Minimum Wages – meaning Basic cannot be lower than statutory notified wages for that state/skilled.

Rule:

• If 50% of CTC gives Basic < Minimum Wages, then Basic must be upgraded to at least Minimum Wage.

Example:

• If state minimum wage = ₹12,000, and 50% of CTC = ₹10,000, then Basic must be corrected to ₹12,000.
  
  

2.2 HRA (House Rent Allowance)

• Typically, 40–50% of Basic Salary.

• Tax-exempt under Section 10(13A) if employee pays rent.
  
  

2.3 LTA (Leave Travel Allowance)

• Generally, 10% of Basic Salary.

• Tax-exempt under Section 10(5) when claimed against travel bills (domestic travel).
  
  

2.4 Other Allowance (Balancing Head)

• After allocating Basic, HRA, LTA, etc., the remaining amount from CTC is pushed to Other Allowance.

• Keeps the structure in balance so that Gross + Employer = CTC.

• May be fully taxable.

3. Statutory Deductions & Employer Contributions

3.1 Provident Fund (PF)

Employee PF Contribution:

• Standard deduction = 12% of PF wages.

• If the PF wage (Basic + eligible allowances) exceeds ₹15,000/month and the employer applies the statutory ceiling, the deduction is capped at ₹1,800/month (12% of ₹15,000).

• Without the cap (on Actual Basic), PF is calculated on the actual PF wage (Basic) even if it exceeds ₹15,000.

Employer PF Contribution:

• Same rules apply → 12% of PF wages, either capped at ₹1,800 or calculated on actual wages.

Flat Deduction Rule:

• Wherever the ceiling applies, PF deduction becomes a flat ₹1,800 for employees earning more than ₹15,000 PF wage per month.

When is PF Compliance Mandatory?

• Companies employing 20 or more employees are legally required to register under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
  
  

• Once covered, every eligible employee must be provided PF benefits, ensuring retirement savings and social security.
  
  

3.2 Employee State Insurance (ESIC)

Applicability:

• ESIC is mandatory when an employee’s Gross Salary (including allowances) is ₹21,000/month or below.

• Once an employee becomes eligible, ESIC contributions continue for the full contribution period, even if salary later rises above ₹21,000.

Employee Contribution:

• 0.75% of Gross Salary is deducted every month.

Employer Contribution:

• 3.25% of Gross Salary is paid by the employer.

Coverage & Benefits:

• Employees and their dependents get medical care, sickness benefits, maternity benefits, and disability cover under the ESIC scheme.

• Provides social security and healthcare support especially for low-income employees.

Compliance Liability:

• Companies with 10 or more employees (in most states) are required to register under ESIC.

• Once covered, all eligible employees must be enrolled, ensuring statutory compliance.
  
  

3.3 Professional Tax (PT)

• State-specific monthly tax deducted from employee salary.

• Example:

  • Telangana – ₹200/month if salary > ₹15,000.

  • Maharashtra (Male) – ₹200/month, Maharashtra (Female) – exempt till ₹25,000.
    
    

3.4 Gratuity

• Employer contribution = 4.81% of Basic Salary.

• Payable after completion of 4 year 240 days or 5 years of continuous service.
  
  

3.5 Statutory Bonus

• Employer contribution = 8.33% of Basic Salary.

• Applicable if Basic ≤ ₹21,000.
  
  

3.6 NPS (Optional)

• Employer and employee can contribute % of Basic.

• Provides retirement corpus.
  
  

4. Why Minimum Wages Matter in Salary Structure

• Compliance: As per Minimum Wages Act, 1948, no employer can pay less than state-notified minimum wages for a given role.

• PF, ESIC & Bonus Calculation: Basic should not be less than Minimum Wages, as statutory contributions are linked to it.

• Payroll Risks: If Basic < Minimum Wages, employer may face penalties during statutory audit.

Example:

• State minimum wage = ₹13,000

• CTC = ₹3,60,000/year (₹30,000/month)
  
  

• If Basic is set at 40% of CTC = ₹12,000 → ❌ Non-compliant
  
  

• Correct Basic must be at least ₹13,000 → ✅ Compliant