From CTC to In-Hand: What Actually Lands in Your Account
You've accepted an offer of ₹15 lakhs CTC. But when your salary hits your bank on the last day of the month, it's nothing close to ₹1.25 lakhs. Where did the rest go? This calculator answers that question precisely, breaking your CTC all the way down to the rupee you actually receive.
The CTC Is Not Your Salary
CTC stands for Cost to Company — it's the total expense an employer incurs for you. It bundles together your gross pay and several employer-side contributions that never touch your bank account:
- Employer PF: The company contributes 12% of your basic salary (capped at ₹1,800/month, i.e., ₹21,600/year) to your Provident Fund account. This is your money, but it's locked until retirement.
- Gratuity: An annual provision for the gratuity payout you'll receive after 5 years of service. Typically 4.81% of basic salary.
- Health Insurance Premium: Many companies include their group health insurance cost in your CTC.
Once you strip these out, you're left with your Gross Salary — the starting point for calculating your actual take-home pay.
The Deductions That Come Out of Gross
1. Employee Provident Fund (EPF) You contribute 12% of your basic salary to your PF account every month. Like the employer share, this is computed on a statutory wage ceiling of ₹15,000/month, giving a maximum employee deduction of ₹1,800/month (₹21,600/year). PF is eventually returned to you, but for now it reduces your monthly cash flow.
2. Professional Tax A state-level tax on employment income. Most states that levy it cap it at ₹200/month (₹2,400/year). Maharashtra goes slightly higher at ₹2,500/year. Several states — including Delhi, Haryana, Rajasthan, and Uttar Pradesh — levy no professional tax at all.
3. Employee State Insurance (ESI) Applicable only when your gross monthly salary is ₹21,000 or below. Your contribution is 0.75% of gross wages. Most professionals earning above this threshold are exempt entirely.
4. Income Tax (TDS) Your employer deducts income tax at source every month, spread equally across the financial year. The amount depends on your taxable income after standard deduction and any other deductions you declare, and crucially, on which tax regime you've opted into.
Old Regime vs. New Regime: Which Puts More Money in Your Pocket?
| Old Regime | New Regime | |
|---|---|---|
| Rates | Higher slabs | Lower slabs (5% cheaper in key bands) |
| Standard Deduction | ₹50,000 | ₹75,000 |
| HRA Exemption | Yes | No |
| 80C/80D/NPS | Yes | No |
| Best for | Those with heavy deductions | Most salaried employees |
The New Regime wins for most people at moderate CTC levels, especially those who don't have aggressive investment portfolios. But if you're paying rent, investing ₹1.5L in 80C and contributing to NPS, the Old Regime can still beat it.
The Basic Salary Split: Why It Matters
Your basic salary percentage is the foundation of most calculations:
- PF is computed on basic (capped at ₹15,000/month statutory ceiling)
- HRA is typically 50% of basic in metros and 40% in non-metro cities
- HRA exemption under the Old Regime is the minimum of (actual HRA received), (rent paid minus 10% of basic), and (40% or 50% of basic)
A lower basic means lower PF deductions and higher take-home, but less HRA exemption and smaller eventual PF corpus. Companies often keep basic at 40–50% of CTC for this balance.
What Does a Typical ₹12L CTC Break Down To?
Assume: ₹12L CTC, employer PF included, metro city, New Regime.
- Basic (40%): ₹4,80,000/year → ₹40,000/month
- HRA (50% of basic): ₹2,40,000/year → ₹20,000/month
- Special Allowance: ₹3,58,400/year → ₹29,867/month
- Employer PF (deducted from CTC): ₹21,600/year → ₹1,800/month
- Gross Salary: ₹10,78,400/year → ₹89,867/month
Deductions:
- Employee PF: ₹21,600/year → ₹1,800/month
- Professional Tax (Maharashtra): ₹2,500/year → ₹208/month
- Income Tax (New Regime, FY 2025-26): ~₹45,032/year → ₹3,753/month
Monthly In-Hand: ~₹84,106
That's a gap of over ₹40,000 from the headline CTC figure — and now you know exactly where it went.