Gross salary: Difference between revisions
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Gross salary is the monthly (or annual) salary paid to an employee without tax deductions. Base salary is the salary paid to an employee before adding benefits such as bonuses and bonuses. Gross salary | '''Gross salary''' is the monthly (or annual) ''' salary paid to an [[employee]] without tax deductions'''. Base salary is the salary paid to an employee before adding benefits such as bonuses and bonuses. Gross salary Includes bonuses, overtime, allowances, and other benefits''. | ||
== | ==Etymology of gross salary== | ||
Old French salaire < Latin salārium ("wage") salārius ("to salt") Various attempts have been made to explain how the Latin word for ``wage'' in the neuter form of relating'' came from the adjective relating to salt''. , but this representation has not been proven. A commonly cited theory is that Roman soldiers were sometimes paid in salt, so the phrase means "salt [[money]]", but there is no evidence from ancient sources anymore. | |||
Middle English (meaning "thick, huge, bulky"): from Old French gros | Middle English (meaning "thick, huge, bulky"): from Old French gros | ||
== | ==What is gross salary?== | ||
It refers to income before all mandatory and voluntary deductions such as income taxes, provident funds, and health | It refers to '''income before all mandatory and voluntary deductions''' such as income taxes, provident funds, and health insurances. | ||
Employers are required to provide a breakdown of all components of gross pay on monthly payslips. This may also include benefits that the employee receives. The amount an employee takes home after | Employers are required to provide a breakdown of all components of gross pay on monthly payslips. This may also include the benefits and bonusses that the employee receives. The amount an employee takes home after paying all the deductions is called the [[net salary]] (Sargu, 2022, p. 169). | ||
Monthly pay slips must include: | Monthly pay slips must include: | ||
* Organization Name | * [[Organization]] Name | ||
* Employee ID | * Employee ID | ||
* Date of Birth | * Date of Birth | ||
* Bread | * Bread | ||
* Employment Date | * [[Employment]] Date | ||
* Title | * Title | ||
* Vacation Days | * Vacation Days | ||
| Line 27: | Line 27: | ||
* Total Deductions | * Total Deductions | ||
== Components of | ==Components of gross salary== | ||
The '''components of gross salary''' are (Moletsane, 2016, p. 31): | |||
# Base Salary. Amounts paid to employees, excluding bonuses, benefits, benefits, and incentives. | # Base Salary. Amounts paid to employees, excluding bonuses, benefits, benefits, and incentives. | ||
# HRA or housing rent assistance. The amount | # HRA or housing rent assistance. The amount paid to cover the employee's housing costs. | ||
# Donation to the Provident Fund. The employee's share of the salary is sent to the Employment Provision Fund. This is | # Donation to the Provident Fund. The employee's share of the salary is sent to the Employment Provision Fund. This is 12% of the employee's fixed salary component. | ||
# Extra allowance. This salary component includes additional benefits provided by the company. This includes, but is not limited to, transportation, promotion, and attendance allowances. | # Extra allowance. This salary component includes additional benefits provided by the [[company]]. This includes, but is not limited to, transportation, promotion, and attendance allowances. | ||
# Special residue. This may include additional amounts due to employee salary increases. | # Special residue. This may include additional amounts due to employee salary increases. | ||
# Additional services. Benefits may include benefits provided in addition to basic salary. Most often these are currency components. However, some companies may also have non-monetary components paid to employees as fringe benefits. | # Additional services. Benefits may include benefits provided in addition to basic salary. Most often these are currency components. However, some companies may also have non-monetary components paid to employees as fringe benefits. | ||
# Bonus. Employees can receive additional amounts as annual bonuses | # Bonus. Employees can receive additional amounts as annual bonuses. This amount is related to the performance of the company's employees and has no limit. | ||
This amount is related to the performance of the company's employees. | |||
== How is | ==How is gross salary calculated?== | ||
Gross Salary includes base salary and benefits before deductions such as Employment Tax, TDS and Provident Fund. | Gross Salary includes base salary and benefits before deductions such as Employment Tax, TDS, and Provident Fund. to calculate the gross salary the following calculation is made: '''base salary + HRA + other benefits'''. | ||
==What is the difference between | ==What is the difference between gross salary and basic salary?== | ||
There are | There are differences between gross salary and basic salary (Solt, 2013, p. 5): | ||
Gross salary is the monthly (or annual) salary paid to an employee without tax deductions. | * Gross salary is the monthly (or annual) salary paid to an employee without tax deductions. | ||
Base salary is the salary paid to an employee before adding benefits such as allowances and benefits. | * Base salary is the salary paid to an employee before adding benefits such as allowances and benefits. | ||
Gross salary includes bonuses, overtime, allowances and other benefits. | * Gross salary includes bonuses, overtime, allowances, and other benefits. | ||
Base salary represents only the primary amount an employee receives. Some calculations, such as HRA and PF deductions, are based on this threshold. | * Base salary represents only the primary amount an employee receives. | ||
Some calculations, such as HRA and PF deductions, are based on this threshold. | |||
==What is the difference between | ==What is the difference between gross salary and net salary?== | ||
Gross Salary is the employee's amount before deductions, whereas | Gross Salary is the employee's amount before deductions, whereas net salary is the amount the employee receives after all deductions have been taken into account. | ||
Gross salary includes base salary, HRA and other benefits, while net salary is gross salary minus income tax, employment tax and provident fund. | Gross salary includes base salary, HRA, and other benefits, while net salary is gross salary minus income tax, employment tax, and provident fund. | ||
== | ==What is deducted from gross wages?== | ||
The amount of deductions taken from gross wages may vary depending on your country of residence and the company worked for. However, these are the most common deductions found on payslips: | |||
This is the most | * Taxes - These are mandatory and based on the [[government]] tax [[system]]. The amount is withheld at source. Depending on the gross salary, this tax will be a percentage of the gross income. | ||
* retirement allowance - This is the money that goes into a pension, usually a percentage of the gross salary. In most countries, part of the salary is deducted into a personal public pension. Some countries offer the [[option]] of contributing in addition to a personal or company pension [[plan]]. | |||
* incentives - These can be long term or short term. For example, a short-term incentive could be a bonus paid within the same year after a certain goal is achieved. Long-term incentives are 3-5 year bonuses paid in cash, stock, or company shares. these bonuses are considered taxable income. | |||
* [[Insurance]] - Health insurance is likely part of your benefit package, so it will be deducted from your salary. The amount depends on where you [[work]] and the health insurance system in your country. Insurance premiums are usually deducted from your pre-tax income. | |||
* Employee Specific Deductions - If your job requires you to wear a particular uniform or use special equipment, the employee may be eligible for subsidies for those costs. This must be specified in the employment contract. | |||
Note that some of the deduction mentioned above are pre-tax deductions. This means that money is deducted from the gross salary before related taxes, such as pension contributions and health insurance. There are also after-tax deductions that are deducted from the net salary or deducted after taxes have been applied. | |||
{{infobox5|list1={{i5link|a=[[Full service leasing]]}} — {{i5link|a=[[Guaranteed renewable]]}} — {{i5link|a=[[Residual payment]]}} — {{i5link|a=[[Short rate cancellation]]}} — {{i5link|a=[[Part-time work]]}} — {{i5link|a=[[Additional voluntary contributions]]}} — {{i5link|a=[[Indirect labor costs]]}} — {{i5link|a=[[Lieu days]]}} — {{i5link|a=[[Longevity pay]]}} }} | |||
==References== | ==References== | ||
* | * Moletsane J. N, (2016), ''[https://etd.cput.ac.za/bitstream/20.500.11838/2100/1/203091965_Moletsane_JN_MTech_Pub_Man_Bus_2016.pdf an evaluation of the salary structure of an university of technology's Hr department]'' Cape Peninsula university | ||
* Sargu N, (2022), ''[https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1585 The European Model of Progressive Salary Taxation] | * Sargu N, (2022), ''[https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1585/1833 The European Model of Progressive Salary Taxation]'' University of Moldova | ||
* Solt F, (2013), ''[http://www.un.org/en/development/desa/policy/news_events/solt-un-talk.pdf the standardizes world income inequality database]'' University of Iowa. | |||
{{a|Aron van der Putten}} | {{a|Aron van der Putten}} | ||
[[Category:Basic concepts]] | [[Category:Basic concepts]] | ||
Latest revision as of 22:10, 17 November 2023
Gross salary is the monthly (or annual) salary paid to an employee without tax deductions. Base salary is the salary paid to an employee before adding benefits such as bonuses and bonuses. Gross salary Includes bonuses, overtime, allowances, and other benefits.
Etymology of gross salary
Old French salaire < Latin salārium ("wage") salārius ("to salt") Various attempts have been made to explain how the Latin word for ``wage in the neuter form of relating came from the adjective relating to salt. , but this representation has not been proven. A commonly cited theory is that Roman soldiers were sometimes paid in salt, so the phrase means "salt money", but there is no evidence from ancient sources anymore.
Middle English (meaning "thick, huge, bulky"): from Old French gros
What is gross salary?
It refers to income before all mandatory and voluntary deductions such as income taxes, provident funds, and health insurances. Employers are required to provide a breakdown of all components of gross pay on monthly payslips. This may also include the benefits and bonusses that the employee receives. The amount an employee takes home after paying all the deductions is called the net salary (Sargu, 2022, p. 169).
Monthly pay slips must include:
- Organization Name
- Employee ID
- Date of Birth
- Bread
- Employment Date
- Title
- Vacation Days
- Unpaid Leave
- Balance
- Base Salary
- Benefits
- Deductions
- Gross Salary
- Total Income
- Total Deductions
Components of gross salary
The components of gross salary are (Moletsane, 2016, p. 31):
- Base Salary. Amounts paid to employees, excluding bonuses, benefits, benefits, and incentives.
- HRA or housing rent assistance. The amount paid to cover the employee's housing costs.
- Donation to the Provident Fund. The employee's share of the salary is sent to the Employment Provision Fund. This is 12% of the employee's fixed salary component.
- Extra allowance. This salary component includes additional benefits provided by the company. This includes, but is not limited to, transportation, promotion, and attendance allowances.
- Special residue. This may include additional amounts due to employee salary increases.
- Additional services. Benefits may include benefits provided in addition to basic salary. Most often these are currency components. However, some companies may also have non-monetary components paid to employees as fringe benefits.
- Bonus. Employees can receive additional amounts as annual bonuses. This amount is related to the performance of the company's employees and has no limit.
How is gross salary calculated?
Gross Salary includes base salary and benefits before deductions such as Employment Tax, TDS, and Provident Fund. to calculate the gross salary the following calculation is made: base salary + HRA + other benefits.
What is the difference between gross salary and basic salary?
There are differences between gross salary and basic salary (Solt, 2013, p. 5):
- Gross salary is the monthly (or annual) salary paid to an employee without tax deductions.
- Base salary is the salary paid to an employee before adding benefits such as allowances and benefits.
- Gross salary includes bonuses, overtime, allowances, and other benefits.
- Base salary represents only the primary amount an employee receives.
Some calculations, such as HRA and PF deductions, are based on this threshold.
What is the difference between gross salary and net salary?
Gross Salary is the employee's amount before deductions, whereas net salary is the amount the employee receives after all deductions have been taken into account. Gross salary includes base salary, HRA, and other benefits, while net salary is gross salary minus income tax, employment tax, and provident fund.
What is deducted from gross wages?
The amount of deductions taken from gross wages may vary depending on your country of residence and the company worked for. However, these are the most common deductions found on payslips:
- Taxes - These are mandatory and based on the government tax system. The amount is withheld at source. Depending on the gross salary, this tax will be a percentage of the gross income.
- retirement allowance - This is the money that goes into a pension, usually a percentage of the gross salary. In most countries, part of the salary is deducted into a personal public pension. Some countries offer the option of contributing in addition to a personal or company pension plan.
- incentives - These can be long term or short term. For example, a short-term incentive could be a bonus paid within the same year after a certain goal is achieved. Long-term incentives are 3-5 year bonuses paid in cash, stock, or company shares. these bonuses are considered taxable income.
- Insurance - Health insurance is likely part of your benefit package, so it will be deducted from your salary. The amount depends on where you work and the health insurance system in your country. Insurance premiums are usually deducted from your pre-tax income.
- Employee Specific Deductions - If your job requires you to wear a particular uniform or use special equipment, the employee may be eligible for subsidies for those costs. This must be specified in the employment contract.
Note that some of the deduction mentioned above are pre-tax deductions. This means that money is deducted from the gross salary before related taxes, such as pension contributions and health insurance. There are also after-tax deductions that are deducted from the net salary or deducted after taxes have been applied.
| Gross salary — recommended articles |
| Full service leasing — Guaranteed renewable — Residual payment — Short rate cancellation — Part-time work — Additional voluntary contributions — Indirect labor costs — Lieu days — Longevity pay |
References
- Moletsane J. N, (2016), an evaluation of the salary structure of an university of technology's Hr department Cape Peninsula university
- Sargu N, (2022), The European Model of Progressive Salary Taxation University of Moldova
- Solt F, (2013), the standardizes world income inequality database University of Iowa.
Author: Aron van der Putten
