Working professionals always want to maximize their take-home or in-hand salary. Employees often get 20 to 30 per cent less in-hand salary compared to their gross salary due to various deductions like EPF contributions, reimbursement structures and income tax deductions. A take-home salary or in-hand salary is also called the net salary that an employee gets in his account.
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So if you want to increase your take-home salary without much investment, you can do it with a minor change in your salary structure. For this, you will have to contact your HR or payroll department. As per the government rule, 12 per cent of your basic salary is deducted every month for the Employees’ Provident Fund (EPF).
Suppose if your basic salary is Rs 20,000 per month, then your EPF contribution for the month will be 12% of 20,000 which is Rs 2400. The employer is also required to contribute 8.33% to the Employee Pension Scheme (EPS) and 3.67% to the EPF. So, 3.67% of Rs 20,000 comes at Rs 734. Since the employer’s contribution is often a part of the employee’s CTC, this means the total EPF deduction from your salary will be Rs 2400+Rs 734=Rs 3134 in this case.
Now, the government has made it mandatory for a person with a minimum salary of Rs 15,000 to be a part of the EPF. So, the mandatory EPF deduction is 12% of Rs 15,000 which is Rs 1800. Thus, if your basic salary is Rs 20,000 as in the above case, still you can opt for a minimum EPF of Rs 1800. In this way, you can decrease your EPF contribution and increase your take-home salary.
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Another way to increase your take-home salary is to restructure your reimbursement components, if any. However, just like the EPF, that will also reflect on your tax liability and you may have to make certain tax-saving investments.
