What is gross salary?

Gross salary refers to the total amount an employee earns before any deductions, whether mandatory (like taxes or provident fund) or voluntary (like insurance or retirement savings). It represents the complete compensation package, including the basic salary, various allowances, bonuses, and overtime payments. This figure differs from net salary, which is the actual “take-home pay” received after all deductions have been applied.

Main Components of Gross Salary

• Basic Salary: The core fixed portion of your pay, determined by your employer.
• Allowances: Extra payments offered to meet specific expenses such as House Rent Allowance (HRA), medical allowance, travel, or conveyance.
• Bonuses and Incentives: Rewards based on performance, productivity, or company profits.
• Overtime Pay: Additional income earned by working beyond regular hours.

How to Calculate Gross Salary

• For salaried employees: Add the basic salary, all applicable allowances, and any bonuses or incentives.
• For hourly employees: Multiply the total hours worked by the hourly rate and include overtime or extra payments if applicable.

Gross salary provides a clear picture of an employee’s total earnings before deductions are applied.