Gross pay and net pay are two different terms used in the organization. Here the difference between Gross Pay and Net pay
What is gross pay?
-Gross pay means the total amount the employee earn without any deduction (taxes, Home allowance, medical facility etc.).
-The taxes, Social security, Medical allowance, health insurance etc are the amount which deduct from your salary. Before deduction of all amounts the amount is known as gross salary.
-In one sentence it is total compensation earned by each employee.
What is net pay?
Net pay is the amount earned by the employee after all the deduction. All taxes, medical allowance health insurance are deducted and the rest amount earned by the employee is known as net pay.
In one sentence we can say that take home amount paid to the employee is net pay.
The simple equation is
Gross pay= Net pay+ deduction of all taxes + Extra deduction
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