CTC, gross salary and in-hand: what the numbers mean
Cost to company is everything your employer spends on you: cash salary, the employer's provident fund share, gratuity provision, insurance premiums and sometimes variable pay. Gross salary is the cash portion before deductions. In-hand or take-home salary is what reaches your bank account after the employee's PF share, professional tax and income tax (TDS) are subtracted. For a ₹12 lakh CTC the in-hand figure is typically ₹95,000 to ₹97,000 a month, not ₹1,00,000.
This calculator rebuilds a typical Indian salary structure from your CTC: basic at 40% of CTC, HRA at 50% of basic, employer PF at 12% of basic (capped at ₹1,800 a month if your company applies the ₹15,000 wage ceiling), an optional gratuity provision of 4.81% of basic, and the balance as special allowance. It then computes income tax under the new regime for FY 2025-26 and gives monthly and annual figures.
The components explained
- Basic salary: the fixed core of pay, usually 40 to 50% of CTC. PF, gratuity and HRA limits are all calculated on it, so a higher basic means more retirement savings and a larger HRA exemption but slightly lower cash in hand.
- HRA: typically 40 or 50% of basic. Fully taxable under the new regime; partly exempt under the old regime if you pay rent.
- Special allowance: the balancing figure that makes the components add up to the cash CTC; fully taxable.
- Employer PF: 12% of basic, of which 8.33% (capped at ₹1,250) goes to the pension scheme. Many employers cap contributions at the ₹15,000 wage ceiling, giving ₹1,800 a month; others contribute on full basic.
- Employee PF: your own 12% of basic, deducted from gross. It is a saving, not a tax, and earns tax-free interest (8.25% for 2024-25).
- Professional tax: a state levy, at most ₹2,500 a year, deducted monthly in states such as Punjab, Maharashtra, Karnataka, West Bengal and Gujarat; there is none in Delhi, Haryana, Uttar Pradesh, Rajasthan or Chandigarh.
- Gratuity: 4.81% of basic set aside by many employers as part of CTC, payable only after 5 years of service.
Worked example: ₹12 lakh CTC
Basic = 40% × ₹12,00,000 = ₹4,80,000 (₹40,000 a month). HRA = 50% of basic = ₹2,40,000. Employer PF, capped at ₹1,800 a month, = ₹21,600 and is included in CTC, so the cash gross salary is ₹12,00,000 − ₹21,600 = ₹11,78,400. Special allowance is the balance: ₹11,78,400 − ₹4,80,000 − ₹2,40,000 = ₹4,58,400.
Income tax: gross ₹11,78,400 less standard deduction ₹75,000 = ₹11,03,400 taxable. Slab tax would be ₹20,000 + ₹30,340 = ₹50,340, but taxable income is below ₹12 lakh so the 87A rebate makes it nil. Deductions are therefore only employee PF ₹21,600 and professional tax ₹2,500, giving an annual in-hand of ₹11,54,300, or about ₹96,190 a month (96% of CTC).
Worked example: ₹20 lakh CTC
Basic ₹8,00,000, HRA ₹4,00,000, employer PF capped at ₹21,600, gross ₹19,78,400, special allowance ₹7,78,400. Taxable income after the ₹75,000 standard deduction is ₹19,03,400. Tax = ₹20,000 + ₹40,000 + ₹60,000 + 20% of ₹3,03,400 (₹60,680) = ₹1,80,680, plus 4% cess ₹7,227 = ₹1,87,907. Annual in-hand = ₹19,78,400 − ₹21,600 − ₹2,500 − ₹1,87,907 = ₹17,66,393, roughly ₹1,47,200 a month or 88% of CTC. Employer TDS will spread the ₹1,87,907 across 12 months as about ₹15,660.
Why your payslip may differ from the calculator
- Variable pay, joining bonus and retention bonus are usually paid separately and taxed in the month received.
- Some companies compute PF on full basic (12% of ₹40,000 = ₹4,800 a month) rather than the ₹1,800 cap; untick the cap toggle to see that case.
- Flexible benefits such as meal cards, fuel, telephone and books reduce taxable salary under the old regime only.
- Employer NPS under section 80CCD(2), up to 14% of basic, is deductible even under the new regime and is the single biggest lever to raise post-tax income for higher earners.
- If you declared the old regime with HRA, 80C and home loan interest, TDS may be lower or higher than the new regime figure shown here; compare with the income tax calculator.
- Taxes are deducted evenly across months, but if you join mid-year or change jobs the employer's TDS may be too low, leaving tax to pay at filing.
How to increase your take-home legally
Ask HR for a higher share of employer NPS (80CCD(2)), which is deductible in both regimes and comes off the taxable salary directly. If you pay rent, keep HRA at 50% of basic and compare the old regime. Use the ₹12 lakh rebate threshold: a taxpayer at ₹12,60,000 taxable income pays about ₹60,000 more than one at ₹12,00,000 despite marginal relief, so an extra ₹60,000 of employer NPS can wipe out the entire tax bill. Finally, check that professional tax and PF are being deducted correctly; errors here are common in small companies and can be corrected through Form 12BB or a revised payslip.