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Breaking Down Payroll and Taxes: From Confusion to Clarity
Deductions
Deductions are the amount of money that is part of the CTC package offered to an employee but is not part of the take-home salary of an employee. It is taken by an employer from an employee’s compensation for example income tax, health insurance premium, life insurance premium, etc.
An employee’s gross salary is different from the net salary which is also called a take-home salary only because of the deductions which are subtracted.
Most common types of Payroll Deductions in India:
- Provident Fund (PF)
- Employee’s State Insurance Corporation (ESIC)
- Professional Tax
- Labour Welfare Fund
