1. Calculating the New Basic Pay

The first step is to determine your new Basic Pay after the increment. This can be done in two ways:

• By Percentage: This is the most common method. The increment percentage is applied to your current Basic Pay.

  • Formula:
    New Basic Pay=Current Basic Pay×(1+Increment %100)New Basic Pay=Current Basic Pay×(1+100Increment %)

• By Amount: This method is used when you know the exact amount of your new Basic Pay, such as when comparing a new job offer.

  • Formula:
    $\text{New Basic Pay}=\text{Manually Entered Amount}$

2. Calculating Allowances

Most allowances are calculated as a percentage of the Basic Pay. Therefore, when your Basic Pay increases, your allowances also increase.

• Dearness Allowance (DA): A cost-of-living adjustment.

  • Formula:
    DA=Basic Pay×DA %100DA=Basic Pay×100DA %

• House Rent Allowance (HRA): For accommodation expenses.

  • Formula:
    HRA=Basic Pay×HRA %100HRA=Basic Pay×100HRA %

• Non-Practising Allowance (NPA): Often applicable in medical or government professions.

  • Formula:
    NPA=Basic Pay×NPA %100NPA=Basic Pay×100NPA %

• Other Allowances: These are typically fixed amounts (e.g., Medical, Transport, Uniform) and do not change with an increment unless specified.

3. Calculating Gross Salary

Gross Salary is the total of your Basic Pay and all allowances before any deductions are made.

• Formula:
  $\text{Gross Salary}=\text{Basic Pay}+\text{DA}+\text{HRA}+\text{NPA}+\text{Other Fixed Allowances}$
  This calculation is performed for both your current and new salary to determine the increase in gross pay.

4. Calculating Deductions

Deductions are subtracted from your Gross Salary. The primary deductions are:

• Provident Fund (PF): The employee’s contribution is typically 12% of the Basic Pay.

  • Formula:
    $\text{PF Deduction}=\text{Basic Pay}\times 0.12$

• Professional Tax (PT): A state-level tax. It is a fixed amount based on your gross salary slab (e.g., ₹200 per month for most employees).

5. Calculating Net (Take-Home) Salary

Net Salary is the final amount you receive after all deductions have been subtracted from your Gross Salary.

• Formula:
  $\text{Net Salary}=\text{Gross Salary}-(\text{PF Deduction}+\text{Professional Tax}+\text{Income Tax})$
  Note: Income Tax is a complex calculation based on annual income and tax regime. For calculator purposes, it’s often estimated on the annual gross pay and then divided by 12 to find the monthly deduction.

6. Calculating the Growth

Finally, the calculator compares the “Before” and “After” figures to show you the actual impact of the increment.

• Monthly Gross Increase:
  $\text{Gross Growth}=\text{New Gross Salary}-\text{Current Gross Salary}$

• Monthly Net Increase:
  $\text{Net Growth}=\text{New Net Salary}-\text{Current Net Salary}$

• Annual Increase:
  $\text{Annual Growth}=\text{Monthly Growth}\times 12$

Satyabrata

Hi, I’m Satyabrata Jana (M.Com), the creator/founder and author of reflectu.in — your one-stop destination for daily updates, smart tools, and trending news, I’ve built this platform to simplify and streamline information in a way that’s useful, reliable, and accessible to everyone.

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