An individual who is acquiring an in – Hand salary of 4.5 LPA in the beginning of their career or new roles in India is considered to be a big accomplishment for various individuals. Though it is not the ultimate highest pay out there , it is a significant amount of salary which could offer a respectable level of living. However, in order to acquire the best financial decisions, it Is necessary for you to know how much salary you will be left with at last after the deduction. In this article we will be sharing all the necessary details related to how variables affect the home tax, etc.
Understanding the Concept of 4.5 LPA In Hand Salary
Below we have mentioned the concept of 4.5 LPA In Hand Salary:
1) Emphasize In – Hand Pay
- It is important for everybody to understand INR 4.5 LPA is not the salary that you will be taking home after deduction but it is a gross pay.
- Deduction of taxes includes the professional tax, income tax, Employee Provident Fund (EPF), resulting in the deduction of in hand paycheck.
2) Figuring Out the LPA
- LPA or Lakhs Per Annum is the replacement of multiples of INR 100,000 earned every year.
- For this particular instance, 4.5 LPA refers to the INR 4,50,000 in yearly income.
3) Calculating Direct Compensation
Calculating the precise salary can be often tough but it can be easier if you follow the below mentioned method:
Salary Gross ( ₹4,50,000) – Deductions (EPF, taxes, etc.) = Salary received in – Hand
the percentage of the deduction may vary on the basis of tax rate, employer regulation, investment, etc. But if we take a rough estimate then it is considered that you will be taking home around ₹3.2 – ₹3.5 lakh per year.
4) Elements that Impact in – hand Pay
There are certain reasons that cause an impact on the amount of hand pay you get at last. Some of those reasons which affect the quantity are given below:
- Most of the percentage of your pay might be going away in order to regulate the higher cost of living in big cities.
- Some companies often provide certain perks which results in the rise of your standard of living.
- Investment and untaxed investment strategies also affect your take – home savings.
5) Importance of the 4.5 LPA In Hand Salary
For most of the professionals who have just started their professional life, a 4.5 LPA in – hand salary is an acceptable amount though it Is not the highest but still it can provide a respectable standard of living. In most of the cities of India, you can pay off all the essentials like rent, food, and transit through this. Moreover, you can even make some savings after paying off for your essentials by opting for financial planning and smart budgeting.
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Estimated Salary Break Down for 4.5 CTC Salary
The estimated breakdown of salary of 4.5 CTC is:
| Earning | Monthly | Yearly |
| House rent allowance | 6750 | 81000 |
| Basic wag | 16875 | 202500 |
| Medical expenses | 1250 | 15000 |
| Conveyance allowance | 1600 | 19200 |
| Other allowance | 11025 | 132300 |
| Deductions | ||
| EPF Contribution by Employer | 1800 | 21600 |
| EPF Contribution by Employee | 1800 | 21600 |
| Professional tax | 200 | 2400 |
| Health Insurance | 1000 | 12000 |
| Net salary | ₹32,700 | ₹3,92,400 |
Estimated Salary Break Down for LPA in Hand Salary
| Earning | Monthly | Yearly |
| House rent allowance | 6750 | 81000 |
| Basic wage | 16875 | 202500 |
| Medical expenses | 1250 | 15000 |
| Conveyance allowance | 1600 | 19200 |
| Deductions | ||
| Health Insurance | 1000 | 12000 |
| EPF Contribution by Employee | 1800 | 21600 |
| Professional tax | 200 | 2400 |
| Net salary | ₹34,500 | ₹4,14,000 |
The common difference between the preceding demonstration, is that the CTC employer’s PF contribution is reduced from the overall salary of the employer and it is covered under LPA. This scenario is only implied when employers have got monetary benefits and bonuses.
Components on Gross Salary of 4.5 LPA in Hand Salary
Components included in the Gross Salary of 4.5 LPA in Hand Salary are:
1) Allowances
Allowance refers to the additional cost provided to an individual along with their salary. The amount of the allowance might change on the basis of the employer and role.
- Dearness Allowance (DA): This benefit is provided to the employees in order to beat the growing inflation and living standards.
- House rent allowance (HRA): This benefit covers all the expenses related to the rent and house related cost of the employee.
- Travel allowance: this benefit is covered for the purpose of travelling for work.
- Conveyance Allowance: This benefit covers all the expenses related to the conveyance of the employee from office to home.
- Medical Allowance: This allowance covers all the medical related expenses of the employee and their family.
- Additional compensation: In Additional Compensation, an individual is provided with other additional benefits like children’s schooling, uniform, etc.
2) Deduction
Deduction is the amount which is deducted from your gross paycheck before receiving net pay. Some of the deduction done in your in – hand compensation are:
- Deduction includes EPF Contribution by Employee (EPF), in most of the Saving programs in India. A small portion of your salary will be credit to your EPF account by both of you and your employer along with retirement benefits.
- Income tax restrained by your employer and later on submitted as the TDS with the government. The tax bracket includes the amount deducted from your salary.
- Professional tax is a tax that an individual has to pay according to the state and income. Meanwhile, it may vary based on the location.
- At last, Additional Subtraction is done which includes loan repayment, health insurance, unpaid holidays, contribution in company matters, etc.
Calculation of In – Hand Salary
Here we have mentioned the formulas of the taxes along with other details
1) Gross Salary Calculation
While calculating Gross Salary Calculation, you have to add the basic salary along with other allowances you received.
Gross Salary = Basic Salary + DA +HRA + Miscellaneous allowance
2) Income tax calculation
Income tax calculation is only estimated as for more precise results, you have to use a tax calculator or a tax advisor who will help you out in providing the result based on the deduction and current tax regime.
3) Net In – Hand Salary Calculation
While calculating the Net In – Hand Salary, you have to subtract the income tax, additional deduction and professional tax from the Gross salary.
In – Hand Salary = Gross Salary – Income Tax – Professional Tax – Other Deductions
4) Taxable Income Calculation
While calculating Taxable Income, you have to subtract the non-taxable allowances along with your EPF contribution from the Gross Salary.
Taxable Income = Gross Salary – Exempt Allowance – Employee PF Contribution
In-Hand Salary Breakdown for Different Annual Packages (LPA)
| Annual Salary (LPA – Lakh per Annum) | Monthly Salary Range (INR) | Yearly Salary Range (INR) |
| 1 LPA | 7,600 – 8,300 | 91,600 – 1,00,000 |
| 1.5 LPA | 11,500 – 12,500 | 1,38,600 – 1,50,000 |
| 2 LPA | 15,500 – 16,600 | 1,85,600 – 1,97,600 |
| 2.3 LPA | 17,817 – 19,100 | 2,13,000 – 2,27,600 |
| 3 LPA | 23,300 – 25,000 | 2,79,600 – 2,97,600 |
| 3.8 LPA | 29,500 – 31,400 | 3,54,800 – 3,77,600 |
| 3.9 LPA | 30,350 – 32,300 | 3,64,200 – 3,87,600 |
| 4 LPA | 31,100 – 33,133 | 3,73,600 – 3,97,600 |
| 5 LPA | 38,900 – 41,400 | 4,67,600 – 4,97,600 |
| 5.5 LPA | 42,800 – 45,600 | 5,14,600 – 5,47,600 |
| 6 LPA | 45,500 – 49,800 | 5,61,600 – 5,97,600 |
| 7 LPA | 51,000 – 54,600 | 6,12,000 – 6,55,200 |
| 8 LPA | 57,200 – 62,400 | 6,87,400 – 7,49,600 |
| 8.5 LPA | 60,400 – 66,384 | 7,24,800 – 7,96,600 |
| 9 LPA | 63,600 – 70,300 | 7,63,200 – 8,43,600 |
| 9.2 LPA | 64,900 – 71,800 | 7,74,800 – 8,62,400 |
| 9.5 LPA | 66,800 – 73,700 | 8,00,000 – 8,84,900 |
| 9.6 LPA | 67,400 – 74,400 | 8,08,000 – 8,93,000 |
| 9.8 LPA | 68,700 – 75,700 | 8,24,400 – 9,09,000 |
| 10 LPA | 70,000 – 77,000 | 8,40,000 – 9,25,000 |
| 11 LPA | 76,300 – 76,300 | 9,15,600 – 10,05,000 |
| 11.5 LPA | 79,300 – 87,100 | 9,51,600 – 10,45,300 |
| 12 LPA | 82,000 – 90,400 | 9,84,000 – 10,85,400 |
Ways to increase your In – Hand salary
Here are some of the ways to increase the overall In – Hand salary after all kinds of deductions:
- Opt for Higher Allowances: You can opt for negotiating for allowances like transport, Dearness, medical, etc. as these expenses are tax – exempted.
- Optimize Tax Savings: In order to increase the in – hand salary, one can use various tax saving methods like PPF, ELSS, NPS under Section 80 which help in reducing the tax.
- Leverage Reimbursement: You can claim Reimbursement For expenses like reduction in travelling, internet, phone bills, etc. and helps in increasing the income in – hand.
- Reduce EPF Contribution: You can go for lower EPF Contribution so that one can receive more in – hand salary and can help in long – term savings.
- Request non – monetary benefits: You can request a negotiation for things like food coupons, insurance, gym membership, etc. which partially affects the taxable income.
- Choose the Old Tax Regime: If needed you can go for the Old Tax Regime, compare all the tax liabilities based on the new or old tax regime. However, opting for the old tax regime can provide more salary in hand.
- Ask for Salary Restructuring: You can even request restructuring your salary structure by applying a large portion of CTC to enjoy the various components like bonuses and allowance.
- Claim professional tax deduction: Claiming professional tax deduction when rightly applied helps in reducing tax burdens along with large amounts of in – hand salary.
- Upgrade skills and promotions: Enhance and upgrade your already existing skills and qualifications in order to qualify for higher paying jobs, initiating a better salary structure.
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Example calculation for ₹4 Lakh CTC
The example of calculation for the ₹4 Lakh CTC are given below:
| Components | Amounts | Remarks |
| House Rent Allowance (HRA) | 80,000 | 50% for metro cities and 40% of basic for non – metro cities |
| Basic salary | 200000 | 50% of CTC |
| Provident Fund (EPF) | -24000 | 12% of basic salary |
| Special allowance | 70,000 | Rest of amount of salary after fixed components |
| Employee State Insurance (ESI) | -7500 | 0.75% of Gross Salary |
| Professional tax | -15000 | Deduction in the taxable income |
| In – Hand Salary | 3,51,000 | After fulfilling all the tax and deduction. |
FAQs
1) What is the in – hand salary of 4.5 lakh CTC?
The in – hand salary of 4.5 lakh CTC is 35,000 per month.
2) How much tax is deducted for 4.5 lakh salary?
Approximately 10% tax is deducted from the 4.5 lakh salary.
3) How is CTC Calculated to in – hand salary?
For in – hand salary, CTC is calculated with the formula i.e. Gross Salary = CTC – Employer’s PF Contribution – Gratuity.
4) Which tax regime is better for a 4.5 lakh salary?
Old tax regime is considered to be better for a 4.5 lakh salary as you can have a large amount of in – hand salary at last.
5) What is the formula for calculating CTC?
The formula for calculating CTC is Gross Salary + Benefits.