Gross salary vs net salary Tax Year 2026–27
Both numbers are on your payslip. Gross is the top line, net is what the bank receives, and three deductions sit between them.
Net salary is another name for in-hand or take-home pay. Your payslip almost certainly uses "net"; everyone in conversation says "in-hand".
The three deductions
1. Provident fund
12% of your PF wage, deducted every month. Whether that wage is your full Basic + DA or the ₹15,000 statutory ceiling is your employer's policy, and the difference is large: ₹1,800 a month against ₹7,200 on a ₹60,000 Basic.
This is the deduction worth being relaxed about. It is not a payment. It goes into an account with your name on it, earning 8.25%.
2. Professional Tax
A state levy, capped at ₹2,500 a year nationally. Karnataka and Maharashtra reach the cap; Telangana and Gujarat charge ₹2,400; West Bengal runs a graduated scale. Delhi, Haryana, Uttar Pradesh, Rajasthan, Uttarakhand, Himachal Pradesh, Goa and Chandigarh do not charge it at all, and Odisha stopped from 1 April 2026.
At around ₹200 a month it is never the reason your salary looks wrong. Worth knowing about mainly because it explains a small February or March dip in some states.
3. Income tax (TDS)
The big one, and the one that varies most. Your employer estimates your annual tax and deducts a twelfth each month. On a ₹10 lakh package under the new regime that comes to ₹0 a year; on ₹25 lakh it is several times that.
TDS depends on the regime you declared and, under the old regime, on the investments you declared. Declare late and your early-year payslips will be lighter than they need to be.
A ₹10 lakh example
| Gross salary | ₹9,54,350 |
|---|---|
| Less: your PF | −₹21,600 |
| Less: Professional Tax | −₹2,500 |
| Less: income tax | −₹0 |
| Net salary | ₹9,30,250 |
That is ₹77,521 a month.
Other things that can appear
Beyond the standard three, payslips sometimes carry a voluntary PF contribution you elected, a salary advance or loan recovery, a notice-period recovery, or your share of a group insurance premium. None of these are universal. If something on your payslip is not on this list, ask payroll rather than guessing.
Common questions
Why is my net salary different every month?
Most often TDS. Employers recalculate it through the year as your declarations are processed and your actual earnings become clearer, so early months can be heavier or lighter. In some states an extra ₹100 of Professional Tax is taken in February or March.
Is PF deducted from gross or from Basic?
From Basic + DA, not from gross. That is why two people with the same gross salary can have very different PF deductions. It depends entirely on how much of their package is Basic.
Can I reduce my TDS?
Under the old regime, yes. Declare your rent, 80C investments, health insurance and home loan interest to your employer early in the financial year. Under the new regime there is very little to declare beyond the standard deduction, which is applied automatically.
Related
Written by Divya Akash Dutta. Published 18 August 2026. Last reviewed 18 August 2026 for Tax Year 2026–27.