SalaryGrid Compensation Calculation Methodology
Detailed disclosure of the formulas, regulatory legislation, statistical trimming methods, and tax rules powering SalaryGrid's calculation engines for Financial Year 2026–27 (AY 2027–28).
1. Statutory & Legislative Foundations
SalaryGrid's calculations do not rely on rough estimates or generic percentages. Every component strictly mirrors active Indian labor and tax statutes:
Calculated according to the New Tax Regime default slabs: ₹0–₹3L (0%), ₹3L–₹7L (5%), ₹7L–₹10L (10%), ₹10L–₹12L (15%), ₹12L–₹15L (20%), and >₹15L (30%). A standard deduction of ₹75,000 is applied to salaried income. Full tax rebate under Section 87A is applied for taxable income up to ₹7,00,000 (effective zero tax for gross salaries up to ₹7,75,000), with progressive marginal relief applied for incomes slightly exceeding the threshold.
Mandatory employee contribution of 12% on Basic Pay + DA. In standard corporate payroll structures, employer matching contributions (12%, split into EPF 3.67% and EPS 8.33% up to the ₹15,000 ceiling) are accounted for within the annual CTC framework.
Computed using the statutory formula: (15 × Last Drawn Basic Pay × Completed Years of Service) / 26. Continuous service of 4 years and 7+ months rounds up to 5 full years under judicial precedent. The statutory tax exemption cap of ₹20,00,000 is enforced.
State-specific slab deductions (typically ₹200/month or ₹2,400/year, with Maharashtra enforcing ₹300 in February) are modeled into monthly take-home equations.
2. The CTC to In-Hand Equation
Corporate Cost to Company (CTC) is decomposed into its constituent elements using industry-standard payroll structures:
By default, Basic Salary is modeled at 50% of CTC (in alignment with modern wage code structuring), HRA at 40% (Non-Metro) or 50% (Metro), and the remainder allocated to Special Allowance.
3. Market Range Benchmarking & Trimming
Salary intelligence ranges displayed on role and city pages are derived from aggregated market hiring data and verified recruitment bandings:
- Interquartile Trimming: Extreme high and low statistical outliers (e.g., non-standard overseas-equivalent packages or unpaid internships) are trimmed to focus on the realistic 10th to 90th percentile market core.
- City Cost Multipliers: Regional compensation differentials are normalized against purchasing power and cost-of-living indices (Bengaluru = 100, Ahmedabad = 72, Mumbai = 110).
- Experience Bands: Clearly demarcated into Fresher (0–1y), Junior (1–3y), Mid-level (3–5y), Senior (5–8y), and Lead/Principal (8+y).
How to Report an Incorrect Estimate
If you encounter a statutory inaccuracy, an outdated professional tax slab for your state, or an unrepresentative compensation bracket, we actively encourage corrections from verified industry professionals.