What is gross net salary?


When you go to work, one of the issues that you need to pay attention to is the salary. And now many workers are still wondering is Net salary and Gross salary. Net salary, What is Gross salary? Should I choose Net salary or Gross salary, which is more beneficial? This is a problem of many new graduates looking for a job, even employees who have worked for many years are still vague about this.

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What is Gross Salary?

Gross salary is the total monthly income that you receive including basic salary and allowances and allowances.After receiving this salary, fees such as personal income, social insurance (social insurance) and health insurance (health insurance)… you will pay by yourself based on the salary received. Or you are already insured by the business. For example: When interviewing for a job, the company pays you 10 million gross salary, then you have to deduct 10.5% of your salary for social insurance, health insurance, unemployment insurance (8% social insurance, 1.5% health insurance). & 1% UI) according to state regulations…. and the amount you receive to take home every month is 8,950,000 VND.

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What is Net Salary?

Net salary is the actual salary that you will be paid by the company every month after deducting other taxes and fees. This is the amount you will receive and do not take any other fees to pay for social insurance, health insurance, unemployment insurance, personal income tax… For example: When interviewing for a job, the company pays you a Net Salary of 10 million, then there is That means you will receive 10 million to take home every month and do not lose any fees for social insurance, health insurance, unemployment insurance, and personal income tax. These fees will be paid by the company according to state regulations for you.

There will be 2 ways to handle it:

Case 1: With a good company, they will rely on the NET salary to contract with you, convert to Gross salary and register with the social insurance agency this amount and pay you all (in essence, it is the same as the NET salary above. )

Case 2: The company signs you with the NET salary and you receive exactly the same every month. But they will register with the social insurance agency with a very low salary and they will pay social insurance, health insurance, unemployment insurance, personal income tax, … very low and when you have problems related to social security, maternity, unemployment and development reveal the truth.

In short, Gross Salary is your total income before deducting fees such as social insurance, health insurance, unemployment insurance …. Net salary is the salary you receive after deducting fees.

So, should you negotiate to choose Gross salary or Net salary?

Once you understand these two concepts, when you go to work, or interview with businesses, you will negotiate with the business on a salary to ensure your interests.

In fact, there will be cases, for the purpose of minimizing costs, so many companies will declare to insurance companies and tax authorities that your Net salary is Gross salary so that the amount the company has to set aside will be less than.

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And this will affect your rights. Because you still pay insurance every month, but your benefits should be much less than that.

If you can negotiate the Gross salary after deducting the above amounts, which is greater than or equal to your expected Net salary, this is a favorable salary for you.

How to calculate when receiving gross salary

A specific example to help you understand better: You assume the position of sales manager with a gross salary of 30 million/month. Because the highest salary to apply for paying health insurance and social insurance contributions is 26 million/month, so you only need to pay at 26 million.– Amount of insurance premium: 26 million x 8% = 2,080 million (1)– Amount of payment Health insurance: 26 million x 1.5 % = 390,000 VND (2)– Amount of unemployment insurance premium: 30 million x 1 % = 300,000 VND (3)– Remaining salary after paying insurance: 30 million – (2,080 million + 390,000 + 300,000) = 27.230 million.– You take the amount of 27.230 million – 9 million (personal deduction) = 18,230. And this will be the number that you are applied to pay personal income tax (PIT).

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– Your personal income tax rate will be calculated according to 4 levels as follows:

+ Tier 1: Taxable income (=+ Tier 2: Taxable income (>5 million to 10 million) x 10% tax rate: (10 million – 5 million) x 10% = 500,000 VND (5)+ Tier 3: Taxable income (>10 million to 18 million) x 15% tax rate: (18 million – 10 million) x 15%= 1.2 million (6)+ Tier 4: Taxable income (>18 million up to 32 million) x 20% tax rate: (18,230 million – 18 million) x 20% = 46,000 VND (7)– So the total amount you have to pay for insurance premiums and personal income tax is: (1) + ( 2) + (3) + (4) + (5) + (6) + (7) = 5,180 million.

– Your last remaining amount: 30 million – 5,180 million = 25,234 million.

Therefore, when negotiating with businesses about salary, you should choose Gross salary, because when the contract is Gross salary, the law specifies the responsibilities of each party to pay social insurance, health insurance, unemployment insurance, trade union and PIT. You take Gross salary – the fee you have to pay = the monthly salary. When there is a problem of maternity, work accident, loss of work capacity, unemployment, you are entitled to benefits on the Gross salary that you pay and your company agrees to pay.

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Hope this article brings you more useful knowledge about salary. Understanding what gross salary is will help you negotiate with employers more effectively. At the same time, they will help you a lot when you become a manager (what is a manager) to be able to apply to detailed salary calculations for employees.


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