How is the "net" salary income calculated?

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Let 's imagine the situation: at the interview you were told the size of the future salary. To understand how much you will receive, as they say, “in hand”, you mentally subtract about 20% from your salary, which are the tax deductions and pension contributions, and get the “net salary” amount. Whether it is correct to take out exactly 20%, what part of the salary should actually be the pension contributions and tax deductions - all this is in this article.

Once again, we note that on a monthly basis, the employer deducts mandatory pension contributions (MPC) against the future pension and individual income tax (IIT) from the salary amount.

After reading our article, you will be able to calculate the final “net” salary by your own without the help of an accountant.

So, first of all, pension contributions in the amount of 10% of the salary are deducted from the salary earned on the basis of Article 25 of the Law of the Republic of Kazakhstan "On pension provision in the Republic of Kazakhstan". However, there are restrictions in the form of maximum possible income for calculating mandatory pension contributions, which is equal to 50 multiplied by the minimum salary (50x minimum salary, that is 3,000,000 tenge for the year of 2022 year).

The individual income tax (IIT) is also 10% (according to Article 320 of the Tax Code of the Republic of Kazakhstan ) of the remaining amount after withholding the MPC, but it is calculated a little differently. The Tax Code provides for an amount not subject to the income tax in the amount of 1 minimum salary (60,000 tenge for 2022), which goes upwards every year.

Consider this in the calculation formula. For example, the salary is 90,000 tenge.

  1. The MPC = 90000 * 0.1 = 9000 tenge.
  2. The maximum amount of MPC = 60,000 * 50 = 3,000,000 tenge.
  3. The amount of MPC 9,000 does not exceed the 3,000,000, so we move on to the next paragraph.
  4. The IIT = (90,000 - 9,000 - 60,000) * 0.1 = 2,100 tenge.
  5. The specified salary of 90,000 is much more than the 60,000 – we shall proceed to the last paragraph.
  6. The salary amount is (90,000 - 9,000 - 2,100) = 78,900 tenge.
  7. So, the 78,900 tenge is the "net" income with an accrued salary of 90,000 tenge.

*This calculation is provided for employees whose accrued income exceeds the amount of 25 multiplied by monthly calculation index established by republican budget law effective as of January 1 of the corresponding financial year.