Calculating Your Salary To Know What To Quote In Your New Job

Calculating Your Salary To Know What To Quote In Your New Job

calculating salary

calculating salary

If you are accepting the offered salary in your new job just based on instincts and because it’s a bit higher than your current salary, you should think again.

Calculating salary is not based on just these common factors but includes closely studying other major aspects related to your basic salary along with other allowances.

In fact, it is important to quote the right amount for your new job much before you are offered the job.

So, let’s understand the salary structure and how you can calculate it:


House Rent Allowance (HRA)

HRA is one of the components of Cost to Company or CTC. It is the allowance your company pays you for your accommodation. It is based on some fixed standards as per your position in the company and your total salary. If the company is providing you with accommodation, you aren’t entitled to the HRA separately.

Out of the expected salary, you should count about 10% of it (basic salary) for the amount counted under HRA. For metro cities, it can go up to 50% of basic salary. The amount quoted under HRA is liable for tax exemption. You cannot claim HRA if you own your house.


Dearness Allowance (DA)

Dearness Allowance or DA is basically an allowance provided by the employer to settle with the cost of living at the location of the job. If you are transferred within a job, you might expect a different DA including in your salary structure.

Your DA can go up to 110% of the basic salary and is revised from time to time by the government for public sector employees. Your DA is an important component which adds value to the salary structure and therefore you must look into it before taking up the decision based entirely on in-hand amount.


Medical Allowances (MA)

Medical allowances are fixed as per the company policies. It just adds to your total salary and doesn’t have tax benefits generally. But while calculating salary for your new job, you should be considering how much MA you received in your previous job and always expect an allowance higher than that.

Read: What Salary Package To Expect After Giving The AMCAT Exam


The incentives part of your salary is something which needs close scrutiny and calculation. If you are earning a lot of extra cash because of these incentives provided, you might even want to consider the job in spite of the salary not being much higher than your previous job.

The incentives might include a bonus for crossing your target every time, profit-sharing with the company, or commission for business you bring to the company.

If you are provided a bonus, you must calculate your real-time capabilities and if you would be able to match-up those targets at the first place. Metering your previous performance can help you gauge that.

Similarly, for profit-sharing, you must know about how much profit the company makes on average and how much of it you will get. Add an average amount to your basic salary.



So, calculating salary isn’t a tough job but one that needs to be considered seriously. Counting and forecasting these things before joining the job can help you gauge the benefits you will be getting from the job. Other than that, you can also consider travel and other allowances if your job requires frequent traveling.