You got the offer letter. You saw the number. You were this close to putting down a down payment for a new car. But then payday came… and the amount credited looked suspiciously smaller.
No, it’s not theft. It’s just the good ol’ drama of gross salary vs net salary — and we’re here to decode the difference once and for all.
First, What Is Gross Salary?
Think of gross salary as the grand total.
It includes:
- Basic pay
- House Rent Allowance (HRA)
- Dearness Allowance (DA)
- Bonuses
- Other allowances (travel, food, special, etc.)
This is the amount mentioned in your offer letter — before any deductions. It’s what the company promises you before reality (aka deductions) kicks in.
And Net Salary?
Net salary is what actually hits your bank account at the end of the month. It’s also called “take-home pay.”
This is after deductions like:
- Provident Fund (PF)
- Professional Tax
- Income Tax (TDS)
- Health insurance (if provided by employer)
So if you’re wondering about the difference between net and gross salary, just remember:
Gross = Full Package
Net = What You Actually Get
Why the Big Difference Between Net Salary and Gross Salary?
Let’s break it down with an example. Suppose your gross salary is ₹50,000/month.
After deductions (say ₹6,000 for PF + TDS + other stuff), your net salary might be ₹44,000.
So, the difference between gross and net salary is ₹6,000 — the amount that goes towards your savings, tax, and benefits.
Don’t worry, that money’s not lost. It’s just… elsewhere (like your PF account, or the government’s tax pool).
Net Salary vs Gross Salary on a Payslip
Still confused? Open your payslip.
You’ll usually see something like this:
- Gross Earnings: ₹50,000
- Total Deductions: ₹6,000
- Net Payable: ₹44,000
That’s your monthly gross salary vs net salary drama — neatly documented.
Why It Matters (Especially If You’re Budgeting)
If you’re making a money plan, setting saving goals, or wondering how much EMI you can afford — always use net salary, not gross.
That’s the real number you live on. The net salary vs gross salary confusion is the first budgeting trap most first-jobbers fall into.
Want To See Where Your Money Goes?
Let Galgal help. We track your earnings, savings, and spending — and help you budget with your net salary, not just dreams.
Smart budgeting
Automatic salary tracking
PF, savings goals, and more
Download the Galgal App and turn “Where did my money go?” into “Ohh, that’s where it went.”
