CTC and In-Hand salary is, by far, the most inevitable and annoying truth of the professional world. Right?
Many new professionals divide their CTC by 12 assuming that would be their salary. 
Happiness goes over the moon but falls back down when the actual amount is way lesser than the sweet assumption. 
In this article, we will discuss each component of your salary structure to understand CTC and In-hand salary.
It’s time for you to thoroughly explore your salary breakdown. That’s where all the knowledge of taxable and non-taxable amounts resides.

Let’s begin…

What is CTC or Cost To the Company?

As the name suggests, it is the amount that a company has to pay to hire an employee. 
CTC is a combination of basic salary, provident fund, various insurances and allowances, gratuity, and sometimes, bonus. CTC also includes the Tax that will be deducted from your salary based on the tax slab.
Often companies offer individual or family health insurances that you can use.  Allowances can be for food, internet, housing rent, cab services, petrol, or anything.
All these things vary from company to company and employee to employee.

What is Gross Salary?

Gross salary is what you get by adding the basic salary, HRA, and other allowances.
Again, this is not your net salary. A tax will be deducted from the gross salary to, finally, calculate your net/in-hand salary.

Let’s take a rough example of 6LPA as a CTC throughout this article. 

Gross Salary Includes the following things-

1. Basic Salary

The basic salary is around 35-45% of your total salary. It could be higher in some cases.
This is the amount that you get paid for the job you are doing with your skillset. The basic Salary is a fixed amount, which differs from employee to employee.
Note that the Basic Salary is 100% taxable. That means you cannot claim tax over basic salary.
For the sake of example, let’s assume that your basic salary is 45% of your total salary. According to 6 LPA, it would become 22500/month or 270,000/year.

2. House Rent Allowance

Companies often offer HRA to cover your rental living arrangements. 
HRA could be-

• 10% of the basic salary.
• 40% of the basic salary if you live in a non-metro city.
• 50% of the basic salary if you live in a metro city. 

You can check your HRA from the salary slip to know which of the above three is applicable to you. HRA is a fully taxable amount under section 10(13A) of the income tax act unless you have proof to claim it.

You can use a rental agreement signed by your landlord as proof to claim HRA. Let’s consider your HRA is 50% of your basic salary. That would make it 11250 INR per month.

3. Medical Insurance

You will also get medical insurance in your gross salary. Most times, your parents, spouse, children, or all would be included in the insurance.
You can claim the insurance benefits by showing medical bills and reports. 

Tip- Medical emergencies can occur anytime. Always understand the whole process of claiming your medical insurance beforehand. It will speed up the process in case you need it.

Let’s say your Medical allowance is 1300 Rs/month.

4. Special Allowances

This includes food, internet, cab services, or anything that the company has to offer additionally. The amount you get for each special allowance varies from company to company.

If you don’t end up using it, this amount is also taxable. If you use the partial allowance, the remaining amount will be taxable.

To save the tax, you can show proof that you, as a matter of fact, have been using these allowances. 

Keep all the bills throughout the year to submit as proof.

For example, let’s assume your special allowance is 6000 Rs/month.

5. Gratuity 

Gratuity is sort of a loyalty bonus. Employees receive it either on retirement or after completing certain years in the company.

Say your company will offer a certain amount after you complete 5 years in the company. You will only get that amount if and only if you work in the same company for 5 years.

6. Bonus

Some companies offer various kinds of bonuses such as performance bonuses and festive bonuses. This amount is also taxable. 

7. Employee Provident Fund

The Employee Provident Fund is a long-term saving plan for your retirement. Both you and your employer contribute to your EPF account each year in agreement.

EPF contribution= Employee Contribution (10-12% of salary) + Employer Contribution (12% of salary)

You can withdraw money from EPF whenever you need it. But you may earn decent returns on it if you hold it for the long term. Let’s say you put 12% of your salary into EPF.

It would be around 4000 and will be deducted from the salary.

Earlier, EPF contributions and the interest earned used to be tax-free. Now the government has changed the rules.

According to new rules-

• Employees have to pay tax on the interest earned on contributions above 2.5 Lakhs/year. This means interest earned on the contribution up to 2.5 lakhs will be tax-free. Please note that employers do not have to pay tax for their 12% contribution.
• If an employee is the only one contributing to the EPF, the same rules apply but for the threshold of 5 lakhs.

Additionally, you will have to pay 10% TDS as per section 194A of the IT Act on taxable interest above the threshold. 

8. Professional Tax

Professional Tax is an amount your employer directly deducts from your salary. It will depend on the tax slab you fall under. 

The company can only deduct up to 2500/month as a professional tax. It varies from state to state in India.

For example, 

Professional Tax Deduction In Maharashtra

Salary Per Month	Professional Tax
Salary up to 7500 (Men)	No Tax
Salary Upto 10000 (Women)	No Tax
Salary Between 7500 – 10000	175 Rs
10000+	200 Rs

Now let’s finally come to the In-hand Salary

What is In-Hand Salary?

Your In-Hand salary or the net salary is what you take home. 

In-Hand Salary = Gross salary – all the deductions

From the above examples, your gross salary becomes = 45000 + Bonus (if any) + gratuity(if any)

Deductions include income tax on salary and allowances along with professional tax. The In-hand salary after deductions and putting 12% in EPF would be around 40300 INR.

That is the final amount you get in your bank account by the end of each month. When you file for ITR, you can claim the taxable amount by showing the necessary proof. 

Note- The above salary calculations are only for the sake of an example. It may vary depending on your salary structure.

Key Takeaways

Studied your salary slip yet? 

Be it your very first job or a 5th switch, understanding your salary structure is very important. Don’t let the illusion of CTC rule you. There’s a lot more to that.

From the above breakdown, you will be able to see how your salary structure works. It will also help you negotiate your salary structure with your employer.

Taxation comes into the picture at almost every subsection of your salary. Income tax rules, even though complicated at times, can come in handy if you know how to benefit from them.

Keep track of your expenses under all the allowances. Maintain a spreadsheet to note down your finances. You can also consider various investment avenues to get more tax benefits. Knowing how to divide your salary into savings, investments, and expenses will help you in the long run.

Get in touch with our advisors to analyze your investment portfolio. Start building wealth for your retirement as early as you can.

You may like to read- 

7 Types of Tax Saving Instruments

Benefits of Investing Early

What is CAS?

Consolidated Account Statement or CAS is an account statement that holds the summary of all your investment transactions. CAS statements give you an overview of your mutual fund investments, SIPs, and other financial instruments held under your Demat account.

The statement fetches all the buy/sell investment transactions associated with your PAN. 

Usually, fund houses and wealth managers send the statement to investors each month. But even if not, you can easily download e-CAS online from platforms like CAMS.

Why Download e-CAS?

1. An e-CAS statement helps you keep track of all your investments and profits earned from it.
2. You can make further investment decisions based on the e-CAS statement. 
3. Even though you can track your investment via an online Demat account, an e-CAS statement keeps you organized and informed.
4. Most importantly, the e-CAS statement helps you identify and file income tax. 

Here is how to quickly download e-CAS online.

Steps to download e-CAS online

You can download e-CAS from various platforms such as CDSL, NSDL, or CAMS.

For the sake of the example, let’s go with CAMS.

CAMS lets you create an account to track each transaction and download statements. But you don’t need to have an account to generate e-CAS.

Step 1- Visit – https://www.camsonline.com/ 

Step 2- Navigate to the ‘MF Investors’ from the header menu to browse the services for the investors.

From the listed services, we are looking for ‘Statements’.

Under Statements, go with CAS-CAMS+KFintech. It will have all your investment transactions. 

Step 3- After selecting CAS-CAMS+KFintech, go ahead and fill in the details.

• You can either go with the summary or the detailed statement. 
• Select the duration for which you want to download the statement. 
• Select the preferred folio listing. 
• Provide your email address and create a password.
• You will need this same password to open the e-CAS PDF delivered to your email ID.

NOTE- You need to provide the email address associated with all your financial and investment transactions.  

The PAN number is optional, but you are free to provide it if you want.

Step 4– Click ‘Submit’.

You will receive the e-CAS pdf to your email ID where you can see all your buy/sell transactions. 

Tips Before Downloading the Statement

• Download monthly statements instead of yearly ones. It will be easy to keep track of each transaction.
• Prefer selecting a detailed report instead of a summary. It will help you plan your future investments. 
• Make sure to use the same email address across all investment platforms.

We hope this was helpful. Reach out to us for any further queries you may have. Get more Personal Finance Tips from our advisors. 

A Permanent Account Number (PAN) card is the most crucial document to secure your financial transactions. 

It’s a unique identification number assigned to you by the Income Tax Department of India.

The primary purpose of a PAN number is to hold all your financial information in one place. It’s easier to keep track of your bank accounts, credit/debit cards, loans, taxation, and investments with a PAN number.

You can apply for a PAN card or modify an existing one online. Follow the below steps to complete the application.

Online Pan Card Application Steps

To get a PAN card, you will need to submit an application to an NSDL PAN portal.

Online procedure is rather quick and easy. You can complete the application from the comfort of your home. Follow the steps below to get a new or modify the existing PAN card online.

Step 1: PAN Card Application Form 49A

Visit the official NSDL website to fill out the application. (Here.) Select the application type as per your requirements- new or modifying the existing one.

For the sake of example, we are applying for a new pan card.

Select the category of your application from the given options. If you are applying for yourself, select INDIVIDUAL or go with the suitable category.

Tip- Keep saving all the changes you make, so that you won’t lose any details. 

Next up, fill up your personal information. Let’s take the example of James Bond’s PAN card application. 

Once you fill-up the necessary details, check the terms and conditions box, enter the captcha and ‘Submit’ the application.

Step 2: PAN Card Application With Token

After submitting the form, you will receive a token to use for your application.

Step 3: KYC and Necessary Document Submission

As you continue with the application, you will be asked to provide KYC details, your Aadhaar number, and further personal details.

Read each instruction carefully before you fill out the form.

If you select e-KYC, your photograph will be fetched from the Aadhaar. If you want to submit a different passport-sized photograph, select the second option ‘Submit scanned image through e-Sign’.

For now, let’s go with e-KYC.

If you are applying as an individual, you will be asked to fill up your parents’ information.

Step 4: Communication Details and Income Details

Select your source of income from the provided options. 

Enter the office or home address and confirm your communication details before going ahead. 

Step 5: Assessing Officer Code 

In the next step, you will need to fill up the area details to determine the tax laws applicable to you. See the AO code search for Pan guidelines here.

If you don’t have the area code and AO type information, select the suitable options given below.  

Let’s say James Bond is an Indian Citizen who happens to live in Pune.

After selecting the area, you will see a list of income tax offices in the area.

To choose the office, read the additional description written next to the office. Depending on your residential/office address, select the appropriate option.

Click ‘Next’.

Step 5: Document Submission

In this step, you will see a drop-down menu to select proof documents for identity, address, and date of birth. You can choose to go by Aadhaar details or select different documents as per your convenience. 

If you select different documents, you will see an option below the declaration to upload and submit chosen documents.

Once you have all the document details ready, click on the Submit button.

Final Step- Confirmation and Payment

As you click Submit, you will be redirected to the final step where you cross-check all the information filled during the previous steps. 

Make sure you have entered the correct details. If not, you can go back to fix it. If yes, you can confirm and proceed.

You will need to complete the KYC and Verification process with your Aadhaar number via OTP sent to your mobile number.

The last step is to pay the fees for the application via any online payment method.

Your application will be complete after the payment process. You will get the entire application in the form of a PDF.

If you selected the option of the physical card, you will receive it at the address mentioned on the application.

For any queries, reach out to us anytime. 

Tax on your annual income is as annoying as pineapples on Pizza, right?

Trust us, we hear you. 

You can pick those annoying pizza toppings and save yourself from misery. Similarly, you can save a ton of tax if you know where to invest. 

As much as you might dislike it, you gotta do the taxes. 

Don’t worry though. Our team has shortlisted some popular and useful tax-saving instruments. So get a pen and paper and note down beneficial investment avenues for you.

Let’s save some tax, shall we?

7 Tax Saving Instruments For Investors

1. ELSS Mutual Funds

Equity Linked Saving Scheme is one of the popular tax-saving instruments among investors. Not only can you save tax but also earn some decent returns over the investment horizon.

Fund houses invest at least 80% of total assets into equity or equity-related instruments. You can invest any amount in ELSS funds. However, you are only eligible to get tax deductions on a maximum of 1.5 lakhs of the total invested amount. 

On top of that, you can also get tax benefits on long-term capital gains of less than 1 lakhs. 

2. Public Provident Fund (PPF)

PPF is another popular investment avenue among Indian households as it’s a government-backed fixed-income scheme. You can build wealth over the years and save tax on the PPF amount.

You can create a PPF account in a bank or in a post office depending on your convenience. Government announces the interest rate on PPF each year which remains the same for that year. 

You can invest from Rs. 500 to 1.5 Lakhs in a financial year to get tax exemption under section 80C of the IT Act. The interest earned is also exempt from tax.

Though the lock-in period for the PPF amount is 15 years, you can withdraw the partial amount in 5-year intervals or get a loan against that amount. Read more about PPF here.

3. Tax Saver Fixed Deposit

Tax Saver Fixed Deposit is a tax-saving FD under section 80C of the IT Act with a lock-in period of 5 years. Individual or joint account holders can create this FD to get tax benefits. 

For joint accounts, only the first holder is eligible for tax benefits. 

If you are planning to create FD, go with a tax saver FD scheme. Please note that any premature withdrawals may compromise your tax benefits. Read the scheme terms carefully before creating the FD.

4. National Pension System

Post-retirement financial security is one of the important decisions one has to make. If you already don’t have a retirement plan, you must create one to safeguard your future.

National Pension System/Scheme can be beneficial for you to build retirement funds and save taxes. It’s a systematic investment policy where both employees and employers can invest funds. You can save tax on up to 1.5 lakhs of the total amount under section 80C of the IT Act. 

Additional Tax Benefits Over and Above 80C: Salaried employees can also save tax on up to 50,000 under section 80CCD(1B) of an IT act. Employees become eligible to get tax exemption by investing up to 10% of their salary into NPS. Self-Employees can get tax benefits of an additional 50,000 under 80CCD(1B) by investing 20% of their annual gross income.

5. National Savings Certificate

Similar to PPF, NSC is also the safest investment where you can earn interest and gain tax benefits. 

NSC is a fixed-income investment scheme available to purchase at any post office branch. With 5 years lock-in period, it offers returns nearly similar to FDs. 

You have to invest atleast 1000 in NSC. Though there is no maximum investment amount threshold, you can only get tax exemption on up to 1.5 lakhs under 80C of the IT Act.

6. Insurance Premium

Individuals who have purchased life insurance are eligible for tax exemption of up to 1.5 lakhs of the total premium paid under section 80C of the IT act. 

The amount on maturity or the amount the nominee gets after the passing of the policyholder is also tax-free.

If you are also paying for your family’s and parent’s health insurance, then you are eligible for tax benefits under section 80D of an IT act. 

Here’s how it works:

Healthcare Insurance Covered Individuals	Yourself + Spouse + Children	Your Parents	Total Tax Exemption Under 80c
Yourself, spouse, children (< age 60) + parents (< age 60)	25,000	25,000	50,000
Yourself, spouse, children (< age 60) + parents (> age 60)	25,000	50,000	75,000
All covered individuals (> age 60)	50,000	50,000	1,00,000

7. Senior Citizen Savings Scheme

As the name suggests, the scheme is beneficial for senior citizens. By investing up to 15 lakhs in SCS policy, senior citizens can get tax exemptions of up to 1.5 lakhs. 

The eligibility criteria for the SCSS:

• Citizens aged 60 and above
• Citizens aged above 55 who have voluntarily retired
• Employees of the defense sector of India aged above 50

The Central Government of India determines the interest rate on the SCS scheme, making it safer to invest in.

Conclusion

Section 80C of the IT act is the most popular tax-saving act. Any one or a combination of the options mentioned above can help you get tax exemption on up to 1.5 lakhs in a financial year.

For working individuals, we would recommend ELSS mutual funds or PPF. Starting an ELSS SIP can help you build wealth as well as save tax. 

PPF has some great advantages as you gradually save for a longer duration. It offers a higher interest rate than FD or saving account.

Choose what fits best for your financial goals. Or you can always reach out to our advisors for more guidance and portfolio analysis.

Gone are the days when financial planning was the responsibility of a man. Now women are equally financially stable and independent. 

Whether as homemakers, self-employed women, or working professionals, women are becoming increasingly astute in financial planning. Although earning income is a part of financial independence, real stability comes through money management.

Financial planning, in reality, is beyond saving a chunk of monthly salary. It is also about having a long-term wealth goal for a secure future.

Women often plan everything ahead of time. It’s time to now create a plan for financial stability and security. 

Here are some tips to help you achieve your financial goals;

Top 10 Financial Planning Tips For Women

1. Plan Long-Term Goals For Your Retirement

You must already be saving a percentage of your salary each month. That’s good, but that won’t be enough.

Various studies have proved that women live longer than men. And, women’s work-life span is shorter.

We have often come across people who only plan to build wealth until they are, say, 78-80 years old. But what if you live longer than that? What will you do for the next 10 or possibly more years without proper financial planning?

Additionally, women face various challenges in their professional lives. Many women give up their jobs to look after their house and children. On top of that, women often have a lower pay structure than their counterparts. 

As unfair as it sounds, women have fewer resources and less time to build wealth. However, overcoming hurdles and having a secure financial life is achievable. 

You can start building wealth for your retirement by investing early. Allow yourself to think for a longer term. We would suggest adding 10 more years to your retirement savings goals. 

2. Stay Involved in Your Family’s Financial Planning

This is one of the most important tips we would give to all the women out there. Stay involved and stay aware of all your family’s financial planning. We cannot stress this enough.

Even if your husband is responsible for financial planning, you should also have a fair share of thoughts and knowledge.

Sudden circumstances such as the death of the partner or divorce may cause women to trip over finances. Now, who would manage everything? What about that car loan EMI? Or the home loan instalment? And there could be more.

At VNN Wealth, we have come across many women who had no idea about finances after losing their spouse. We have seen women struggle to manage sudden changes in life. While we were able to help them, we would suggest taking the necessary steps to be prepared.

To avoid stumbling across uncertainties in life, always stay on top of all your family’s finances. 

3. Save Every Month Via SIPs

Although women have great money-saving skills, they don’t invest as often. As said above, saving is not enough. You must actively invest too. 

SIPs are the best and easiest way to start building wealth for you and your family. You can invest a small amount of money each month in equity or debt mutual funds. Even INR. 500/month can make a huge difference in the long run. 

Additionally, mutual funds via SIP with compounding interest can exponentially boost your return.

If you already have an investment portfolio, get it reviewed to receive personalized investment tips. VNN Wealth provides complimentary portfolio reviews and our advisors can also help you create and build a portfolio from scratch. 

You may also like- Top 5 benefits of SIP.

4. Invest in Paper Assets Instead of Physical Gold

We Indians have always been buying gold jewellery as an investment for rainy days. But we are also sentimental about the jewellery. Who would want to sell those beautiful earrings that your mother gave you on your wedding day, right?

Understandable! But not so much reliable.

Instead, invest in Gold ETF. Not only will you save making charges but it’s easier to sell too. No sentiments attached is a plus point. 

5. Keep Track of Expenses and Taxes

Expenses come and go as they please. You wouldn’t know where all your money went without keeping a track of it.

Create categories of expenses and assign a budget for each category. Cut down on unnecessary expenses and maintain an expense sheet. It will help you stay within an assigned budget, but will also help you file taxes.

Taxes are both tricky and fascinating. You can save a lot of money with an effective filing of taxes. You can also invest in various tax-saving instruments to save more tax.

6. Separate Financial Support For Your Family

Family emergencies can knock at your door anytime. You may need to arrange money or break your fixed deposits for your family’s well-being.

Keep different investments for you and your family. Take your family and children’s future into consideration. You may want to create separate savings for your family’s healthcare, children’s education, and your own well-being. 

Don’t sell your retirement funds or personal investments sooner than you had planned. The biggest mistake people often make is the early withdrawal of funds. Not only does it shake up your portfolio, but you will also lose potential returns on those funds. 

Instead, build separate financial support for your family. Don’t sell your funds in a panic.

7. Don’t Forget About Expenses During Your Old Age

Today, you are doing everything in your household. Tomorrow, you might not be able to do it.

Old age can cause quite a few difficulties. You may need to hire a househelp or a full-time attendant. You might not have as much energy or health as you have right now. Expenses in your old age might cause a solid dent in your savings if you are not prepared. 

Always plan ahead of time for such expenses for your family and yourself. 

8. Health Insurance Plan 

Many companies often provide health insurance to employees and you may already have it. However, we would advise you to also buy an external health insurance plan for you and your family. It’ll help you cover medical expenses without burdening your savings.

Many health insurance companies offer better coverage if you buy it early in your life. 

While buying health insurance, don’t forget to get life insurance. Be sure to include critical illness or disability in your life insurance as an added support to your health insurance.

You can also opt for whole-life insurance coverage to provide financial support to your spouse. That way, your surviving spouse gets a payout.

9. Re-Evaluate Your Financial Plan Periodically

The expenses you have today may change in a few years. Expenses after getting married, having children, and growing older will be different and probably dramatic.

By re-evaluating your financial plan, you will be able to consider newly added expenses. Update your investment portfolio accordingly.

10. Quick Money Saving Tips

• Evaluate your money-spending habits to cut down on unnecessary expenses.
• Unsubscribe to online/offline services that you don’t need anymore.
• Keep track of your credit card payments, EMIs, and loan installments. 
• Use your credit card benefits and rewards to save more on each purchase.
• Set a spending limit on your debit/credit cards.
• Be vocal about your financial goals with your spouse/family, so you can align your goals. 
• You can also consider hiring a financial advisor for your family. Here’s how to choose the right financial advisor. 

Plan Your Finances Today!

Have you ever seen your mother or grandmother save money in her rice container? Whenever she could, she would keep a small amount safe somewhere for rainy days.

Women have always been excellent financial planners. However, there is a considerable gap in the technical financial knowledge between men and women. In fact, more than 90% of women in India, do not actively seek financial knowledge. 

It’s time to take it up a notch, ladies! Reading financial news, investment/personal finance blogs, or reaching out to financial advisors can be your next step.

Plan for your and your family’s financial security and well-being. Keep up with your expenses and taxes every year. Invest whenever you can. 

If you are ready to strengthen your investment portfolio, get in touch with our financial advisors. Evaluate your portfolio and rule your finances like a boss.