If you follow our updates on Instagram regularly, you’d recall the two new year resolutions we put down for you. New year financial resolutions, to be specific.

  1. Educate yourself on matters of personal finance.
  2. Apply that knowledge to plan out your finances well.

In line with the first resolution, today, we want to help you decode those mystical components of your salary.

What does your salary structure actually imply? What do all those components on your pay slip mean?
They certainly seem to have complex names. But are they as complex to fully grasp? Let’s take a look.

Your “CTC” or Cost To Company is the total amount spent by a company on an employee in a year.It’s basically one big sum that’s further divided into smaller components.
For simplicity, let’s divide these components into two parts – allowances and deductions.

Your “take-home” salary is the amount that you receive in your account every month.It includes the allowances and is credited to you after reducing some deductions, like income tax (TDS). 

We’ve listed the most common components of one’s salary here.

Salary Components

It is pertinent to note that the Income Tax Department has done away with the popular “Conveyance Allowance”. So going forward, most companies will not list it in the salary structure.
While some of the components might not be a part of your salary structure, it does help to know about them.In case there’s a component of your salary that we haven’t covered, do let us know in the comments section. We’d be happy to add it to the list and explain it in simple terms.

May the coming year and decade see a financially fearless you.

Happy New Year!

Author Bio - Komal Shivdasani

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