Quick answer: Gross salary is everything an employee earns in a year before any deduction. It covers basic pay, house rent allowance, special allowance and any other taxable allowance. It excludes employer PF, EDLI and the gratuity provision, which sit in CTC. Employee PF, professional tax and TDS under section 392 of the Income-tax Act, 2025 then come out of it.
- On an ₹18 lakh CTC in Pune, gross salary works out to ₹17,19,643 a year.
- Employee PF of 12% is deducted from gross, capped at ₹3,000 a month when PF runs on the ₹25,000 ceiling.
- Under the new tax regime, a ₹75,000 standard deduction comes off gross before slab rates apply.
- Gross is also the figure most Indian candidates compare when weighing two offers.
How is gross salary different from CTC?
Gross is CTC minus the costs you carry as employer. Those costs never reach the employee’s bank account.
Foreign finance teams often book CTC as the salary line, then hear from a candidate that the monthly figure looks smaller than promised. Keep both in view.
| Line | ₹18 lakh CTC, Pune |
|---|---|
| Cost to company | ₹18,00,000 |
| Less employer PF (₹3,000 a month) | ₹36,000 |
| Less EPF admin and EDLI | ₹3,000 |
| Less gratuity provision (4.81% of basic) | ₹41,357 |
| Gross salary | ₹17,19,643 |
Within that gross, basic salary is ₹8,59,821 (50%), HRA is ₹4,29,911 and the special allowance absorbs the remaining ₹4,29,911.
What gets deducted from gross salary?
Three lines on a standard Pune payslip. Employee PF takes ₹36,000 a year. Maharashtra professional tax takes ₹2,500, charged as ₹200 a month and ₹300 in February.
Then TDS. The biggest line.
Under the default new regime for tax year 2026-27, taxable income is ₹17,19,643 minus the ₹75,000 standard deduction, or ₹16,44,643. Slab tax is ₹1,28,929 and 4% cess lifts it to ₹1,34,086. Section 202 on the Income Tax Department site sets those slabs. An employee who opts for the old regime gets a different TDS figure, because HRA, LTA and 80C claims cut taxable income first while steeper old slabs apply.
What’s left is the take-home salary: ₹15,47,057 a year, about 90% of gross.
Why does gross move when CTC stays fixed?
Because statutory employer costs come out first. Suppose your CTC is locked at ₹18 lakh and PF runs on the ceiling.
When the EPF wage ceiling rose from ₹15,000 to ₹25,000 on 17 September 2026, employer PF rose by ₹1,200 a month and EPF admin plus EDLI by another ₹100. Gross fell by about ₹1,300 a month. The employee’s own PF also rose by ₹1,200, so in-hand pay dropped further. EPFO’s contribution rate chart shows how the shares split.
So a revised salary letter is wise. Employees notice.
Our salary calculator for India shows the before and after for any package you plug in, including the new-regime TDS and the professional tax for your state.
Our guide to salary structure in India explains how the other components are set.
How does Remunance keep gross salary accurate for your team?
Remunance runs payroll from its own Indian entity, Remunance Services Pvt Ltd in Kothrud, Pune, so every gross figure is built and paid by the legal employer. When a rule moves gross, as the PF ceiling did, we recompute each salary letter before the next payroll run. If your offers were issued before September 2026, ask us to audit your India salary letters.
What else do people ask about gross salary?
Is gross salary the same as CTC?
No. CTC adds employer PF, EPF admin, EDLI and the gratuity provision on top. On an ₹18 lakh CTC the gap is ₹80,357.
Does gross salary include bonus?
Yes, in the month it is paid. A performance bonus or statutory bonus raises that year’s gross and its TDS, even if the offer letter showed it separately.
Is gross salary before or after tax?
Before. TDS, employee PF and professional tax all come out of gross to produce net pay.