2 min
12 May 2025
Money matters can be tricky. Many workers get confused when they see their salary slip. The amount they expect is not what they get in their bank account. This happens because of the difference between gross salary and take-home pay.
This article will help you understand what gross salary means. We will break down how to calculate it and why it matters. Plus, we will show how your home loan eligibility connects to your gross salary.
What is gross salary?
Gross salary is the total amount an employer pays you before any deductions. It includes your basic pay plus all allowances and benefits. When a company offers you a job with a certain pay, they mean the gross salary.
Your gross salary is higher than what you actually take home. This is because various deductions like taxes and provident fund contributions are taken from your gross salary. Want to know if you qualify for a home loan based on your income? Check your eligibility now by entering your mobile number and OTP.
Gross salary components
Your gross salary is made up of several parts. Each part serves a different purpose and may have different tax treatments. Here are the main components:
Components excluded in gross salary
Not everything your employer gives counts as part of your gross salary. Here are some items excluded:
The formula to calculate gross salary is simple:
Gross salary = Basic salary + HRA + Other allowances
For example, if your salary structure looks like this:
Your gross salary would be: Gross salary = 20,000 + 8,000 + 1,500 + 2,500 + 1,250 + 1,667 = Rs. 34,917
Remember, provident fund and income tax deductions do not affect your gross salary calculation.
Difference between gross salary and basic salary
Many people confuse gross salary with basic salary. Here's how they differ:
Difference between gross salary and net salary
Your gross salary is not what you take home. Here's how gross and net salary differ:
Planning to buy your dream home? Your salary might already qualify you for a home loan. Check your eligibility now by entering your mobile number and OTP.
Reporting salary on taxes
When filing income tax returns, you must report your salary income correctly. Here's how it works:
Income tax in India has different slabs. The percentage of tax increases as your income goes up. Here's the current tax structure:
You can reduce your tax burden through various deductions:
Gross salary matters for several reasons:
What is a fair gross salary?
A fair gross salary depends on several factors:
According to the Income Tax Act, Section 17(1) defines what counts as salary for tax purposes:
The taxation of your gross salary follows a systematic process:
How to apply for Bajaj Finserv home loan
Applying for a Bajaj Finserv home loan is simple:
Eligibility criteria to get home loan from Bajaj Finserv
To qualify for a Bajaj Finserv home loan, you need to meet these criteria:
Conclusion
Understanding your gross salary is key to managing your finances. It affects everything from your take-home pay to your loan eligibility. When planning major purchases like a home, knowing how your salary impacts your borrowing power is vital.
Bajaj Housing Finance offers home loans up to Rs. 15 crore* with competitive interest rates starting from 7.99%* p.a. Features like quick approval in 48 hours*, flexible tenure up to 32 years, and no foreclosure fees make it an attractive option.
Their balance transfer facility allows you to switch your existing home loan and avail a top-up loan of up to Rs. 1 crore. With over 5,000 approved projects, getting a quick loan approval is easier.
Whether you're a first-time homebuyer or looking to upgrade, Bajaj Finserv Home Loan can help turn your dream into reality. Check your eligibility for a home loan today by entering your mobile number and OTP verification.
This article will help you understand what gross salary means. We will break down how to calculate it and why it matters. Plus, we will show how your home loan eligibility connects to your gross salary.
What is gross salary?
Gross salary is the total amount an employer pays you before any deductions. It includes your basic pay plus all allowances and benefits. When a company offers you a job with a certain pay, they mean the gross salary.
Your gross salary is higher than what you actually take home. This is because various deductions like taxes and provident fund contributions are taken from your gross salary. Want to know if you qualify for a home loan based on your income? Check your eligibility now by entering your mobile number and OTP.
Gross salary components
Your gross salary is made up of several parts. Each part serves a different purpose and may have different tax treatments. Here are the main components:
- Basic salary: This is the fixed part of your pay that forms the core of your salary structure. Your employer uses this amount to calculate other benefits like provident fund. Basic salary usually makes up 40-60% of your gross salary. It is fully taxable under income tax laws.
- House Rent Allowance (HRA): This helps cover your housing costs. If you live in a rented house, you can claim tax exemptions on HRA based on certain rules. The amount varies but is typically 40-50% of basic salary for metro cities.
- Dearness Allowance (DA): This is mainly given to government employees to offset the impact of inflation. DA rates change periodically based on the cost-of-living index. It helps maintain your purchasing power despite rising prices.
- Transport Allowance: This covers your travel expenses to and from work. A fixed amount is added to your salary each month for this purpose. Some portion of this allowance may be tax-exempt.
- Special Allowance: Any extra benefits not covered under standard allowances fall here. Companies often use this to balance the salary structure. This component is usually fully taxable.
- Medical Allowance: This helps cover your healthcare expenses. Some employers provide a fixed medical allowance, while others offer health insurance. A portion may be tax-exempt under certain conditions.
Components excluded in gross salary
Not everything your employer gives counts as part of your gross salary. Here are some items excluded:
- Reimbursement of medical expenses: If your employer pays directly for specific medical costs, these are not part of your gross salary.
- Leave Travel Concession (LTC): This benefit helps cover your vacation travel expenses. When provided according to rules, it is not counted in gross salary.
- Gratuity: This is a benefit paid when you leave a company after long service. It is not part of your regular gross salary.
- Free meals provided by employer: Food supplied during working hours is not included in gross salary calculations.
- Leave encashment: When you get paid for unused leave when leaving a job, this amount is not part of your gross salary.
The formula to calculate gross salary is simple:
Gross salary = Basic salary + HRA + Other allowances
For example, if your salary structure looks like this:
| Component | Amount (Rs.) |
| Basic salary | 20,000 |
| House rent allowance | 8,000 |
| Transport allowance | 1,500 |
| Special allowance | 2,500 |
| Medical allowance | 1,250 |
| Statutory bonus | 1,667 |
Your gross salary would be: Gross salary = 20,000 + 8,000 + 1,500 + 2,500 + 1,250 + 1,667 = Rs. 34,917
Remember, provident fund and income tax deductions do not affect your gross salary calculation.
Difference between gross salary and basic salary
Many people confuse gross salary with basic salary. Here's how they differ:
| Gross salary | Basic salary |
| Total amount before any deductions | Core component of salary structure |
| Includes all allowances and benefits | Does not include any allowances |
| Used to calculate tax liability | Used to calculate other components like PF, HRA |
| Higher than basic salary | Lower than gross salary |
| Varies based on allowances provided | Usually fixed for a given period |
Difference between gross salary and net salary
Your gross salary is not what you take home. Here's how gross and net salary differ:
| Gross salary | Net salary |
| Amount before deductions | Amount after all deductions |
| Includes all components of pay | What actually gets deposited in your account |
| Formula: Basic + HRA + Allowances | Formula: Gross salary - Taxes - PF - Professional tax |
| Used for loan eligibility assessment | Used for personal budgeting |
| Higher than net salary | Lower than gross salary |
Planning to buy your dream home? Your salary might already qualify you for a home loan. Check your eligibility now by entering your mobile number and OTP.
Reporting salary on taxes
When filing income tax returns, you must report your salary income correctly. Here's how it works:
Income tax in India has different slabs. The percentage of tax increases as your income goes up. Here's the current tax structure:
| Income tax slab | Tax rate | Health and education cess |
| Up to Rs. 2,50,000 | Nil | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% | 4% of tax |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% | 4% of tax |
| Above Rs. 10,00,000 | 30% | 4% of tax |
You can reduce your tax burden through various deductions:
- Section 80C allows deductions up to Rs. 1,50,000 for investments in PPF, ELSS, life insurance premiums, etc.
- Section 80D offers deductions for health insurance premiums.
- Home loan interest can be deducted under Section 24 up to Rs. 2,00,000.
Gross salary matters for several reasons:
- Your gross salary determines your loan eligibility.
- Banks and financial institutions like Bajaj Finserv check your gross salary to decide how much they can lend you. Higher gross salary means better loan terms.
- It affects your retirement planning. Your provident fund contribution is based on a percentage of your basic salary, which is calculated from your gross salary.
- Your gross salary shows your actual worth to the company. It reflects the total cost the employer bears for your services.
What is a fair gross salary?
A fair gross salary depends on several factors:
- Your industry standards play a key role. Different sectors offer different pay scales for similar positions.
- Your experience and skills matter. More experience and specialized skills usually command higher salaries.
- Location affects salary levels. Metropolitan cities typically offer higher salaries to offset the higher cost of living.
- The company size can influence salary structure. Larger companies often provide better compensation packages.
According to the Income Tax Act, Section 17(1) defines what counts as salary for tax purposes:
- Wages and basic salary form the core taxable component.
- Pension or annuity payments are considered part of salary income.
- Gratuity received during employment is taxable under salary.
- Fees, commissions, and perquisites fall under salary income.
- Leave encashment during employment is taxable as salary.
- Employer's contribution to provident fund beyond certain limits is taxable.
- Government contribution to pension schemes like NPS is included in salary for tax purposes.
The taxation of your gross salary follows a systematic process:
- First, calculate your gross total income by adding all components of your salary.
- Next, apply exemptions allowed under the Income Tax Act, like HRA, LTA, etc.
- Then, claim deductions under Chapter VI-A (Sections 80C to 80U) for eligible investments and expenses.
- The resulting figure is your taxable income, on which tax is calculated as per the applicable tax slabs.
- Finally, tax deducted at source (TDS) is subtracted from your monthly salary based on your estimated annual tax liability.
How to apply for Bajaj Finserv home loan
Applying for a Bajaj Finserv home loan is simple:
- Click on the "APPLY" button.
- Enter your personal details like name, mobile number, and employment type.
- Select the loan type you want to apply for.
- Verify your mobile number with OTP.
- Provide additional details like monthly income and required loan amount.
- Enter your date of birth, PAN number, and other required information.
- Submit your application.
Eligibility criteria to get home loan from Bajaj Finserv
To qualify for a Bajaj Finserv home loan, you need to meet these criteria:
- You must be an Indian citizen residing in India.
- Age requirement: Salaried applicants should be between 23-67 years, while self-employed professionals should be between 23-70 years.
- A CIBIL Score of 725 or higher improves your chances.
- You should be either a salaried employee, professional individual, or self-employed individual.
- The documents required for home loan include KYC documents, income proof, and bank statements for the last 6 months.
- Home loan interest rates start from 7.99%* p.a. for salaried employees and 8.30%* p.a for self-employed individuals.
Conclusion
Understanding your gross salary is key to managing your finances. It affects everything from your take-home pay to your loan eligibility. When planning major purchases like a home, knowing how your salary impacts your borrowing power is vital.
Bajaj Housing Finance offers home loans up to Rs. 15 crore* with competitive interest rates starting from 7.99%* p.a. Features like quick approval in 48 hours*, flexible tenure up to 32 years, and no foreclosure fees make it an attractive option.
Their balance transfer facility allows you to switch your existing home loan and avail a top-up loan of up to Rs. 1 crore. With over 5,000 approved projects, getting a quick loan approval is easier.
Whether you're a first-time homebuyer or looking to upgrade, Bajaj Finserv Home Loan can help turn your dream into reality. Check your eligibility for a home loan today by entering your mobile number and OTP verification.
