# How to Calculate Net Salary in Excel (With Easy Steps)

Calculation of net salary in excel is one of the widely used features in excel. A company always has a huge amount of employee salary data with different types of salary structures. A company can get a lot of benefits due to this flexible practice to calculate net salary in excel. The net salary of an employee including bonus, profit, allowances, leave without payment and other deductions can be calculated smoothly in excel. In this particular article, you will be able to get step-by-step instructions to calculate net salary in Excel.

## Calculate Net Salary in Excel: Step by Step Procedures

### Step 1: Employee Database & Basic Salary Structure

Here the below figure is showing the basic salary structure of a company. And we want to calculate the net salary by adding allowances and subtracting deductions subsequently.

### Step 2: Create Allowance and Deduction Structure

Here, the below figure is showing the allowance percentages of basic salary given by the company among which medical expenses, yearly profit bonus, festival bonus, house rent are included and deduction percentage of basic salary made due to provident fund and income tax.

### Step 3: Apply Data Validation Feature

• Firstly, select cell B5.
• Secondly use the Data Validation feature in this cell.

• Then, we go to the Data Tab.
• From the Data Tools section, we select the Data Validation option.

• Once we select the Data Validation option, the Data Validation window will instantly pop up.

• Thereupon, from The feature Allow in the Data Validation window, we select List.
• Then click OK.

• Finally, we insert the dataset range in the Source option.
• The range of datasets is:
`=DATASET!\$B\$5:\$B\$12`

### Step 4: Calculating Gross Salary in Excel

• Gross Salary is the summation of basic salary and allowance.
• At first, we use the Data Validation feature.
• Now a specific employee can be chosen from the list.
• Suppose we want to calculate the salary of Catherine Mitchell.

• At first, select the Dataset range.
• Then the VLOOKUP function of Excel is used.
• Use the below formulaÂ in cell C5:
`=VLOOKUP(B5,DATASET!B5:C12,2,FALSE)`

• Now, we can get medical expenses usingÂ the VLOOKUP function in cell C7.
• Finally, we get the Basic Salary ofÂ  â€˜Catherine Mitchellâ€™.
• Now, to get medical expense the below formula is used:
`=\$C\$5*VLOOKUP(B7,'ALLOWANCE AND DEDUCTION'!\$E5:\$F8,2,FALSE)`

How Does the Formula Work?

• VLOOKUP(B5,DATASET!B5:C12,2,FALSE)

The function searches for value cell B6Â cell according to the Database values of employees in worksheets ranging from B5 to C12. It returns the respective 2nd columns result from the following selection where the B6Â cellâ€™s value is found.

• \$C\$5*VLOOKUP(B7,’ALLOWANCE AND DEDUCTION ‘!\$E5:\$F8,2,FALSE)

\$C\$6 value is then multiplied by the result. The result is \$200.00

• The total value of allowances can be calculated using the SUM function:

`=SUM(C7:C10)`

• Then to get the Gross Salary we use the SUM function in cell C6 and cell C14.
• Total Allowances through the below formula:

`=SUM(C5, C11)`
• The result will look like the below image:

### Step 5: Deduction Calculation

• Firstly,Â we use the Data Validation feature in cell B5.
• Then to calculate the Basic Salary use the below formula:
`=VLOOKUP(B5,DATASET!B5:C12,2,FALSE)`
• The result will look like the image below:

• Select cell C8.
• Now to calculate the income tax use the below VLOOKUP function formula:
`=\$C\$5*VLOOKUP(B7,'ALLOWANCE AND DEDUCTION'!\$E11:\$E12,2,FALSE)`

How Does the Formula Work?

• VLOOKUP(B8,’ALLOWANCE AND DEDUCTION ‘!\$E11:\$E12,2,FALSE)

The VLOOKUP function searches for value cell B8 in range E11:E12. It returns the respective 2nd columns result from the following selection where we found the B8 cellâ€™s value.

• \$C\$6*VLOOKUP(B8,’ALLOWANCE AND DEDUCTION ‘!\$E5:\$F8,2,FALSE)

The \$C\$6 value is then multiplied by the result. The result is \$240.00.

• After that, use the Fill Handle tool.
• Finally, we can get the provident fund amount as well.

• At last, we use the SUM function in cell C11 to get the total deduction:

`=SUM(C7:C8)`
• The final result will look like the below image:

### Step 6: Calculating Net Salary

• Now we can calculate Net Salary.
• Firstly, we copy and paste the link to the Gross Salary inÂ theÂ Net Salary sheet.
• we use the below formula:

`='GROSS SALARY CALCULATION'!\$C\$12`
• The result will look like the below image:

• Secondly, we copy and paste the link into the net salary sheet.
• we use the below formula:

`='DEDUCTION CALCULATION'!\$C\$9`
• The outcome will look like the below image:

• Lastly, select cell C8 and useÂ the below formula:
`=C6-C7`
• The final outcomeÂ will look like the below image:

## Conclusion

Using the above step-by-step procedure, any company can calculate the net salary of employees in Excel. If we can follow the procedure properly,Â we get all the net salary amounts of employees in the most time-consuming way. You can follow Exceldemy.com for more procedures to get help with the calculation related toÂ  Salary and let us know in the comment section below if you need help.

<< Go Back to Salary | Formula List | Learn Excel

Get FREE Advanced Excel Exercises with Solutions!
Farzana Ferdous

Farzana Ferdous, a graduate of Materials & Metallurgical Engineering from Bangladesh University of Engineering & Technology, serves as a technical content creator in the ExcelDemy project. Possessing a passion for innovation and critical thinking, she actively embraces challenges. Beyond her engineering background, she exhibits a keen interest in Excel, having authored numerous articles on Excel & VBA-related issues to simplify the experience for users facing obstacles in Excel. Besides, she is also interested in Advanced Excel,... Read Full Bio

We will be happy to hear your thoughts

Advanced Excel Exercises with Solutions PDF