Why is my in-hand salary so much less than CTC?

CTC includes components you do not receive in cash: Employer PF (12% of basic → goes to EPFO), Gratuity provision (4.81% of basic → paid after 5 years), and sometimes group insurance, meal cards, and LTA. Additionally, Employee PF + Professional Tax + TDS are deducted from your gross. Together, the gap between CTC and in-hand is typically 20–40% of CTC.

What is basic salary as a percentage of CTC?

In India, Basic Salary is typically 40% to 50% of CTC. A higher basic salary means higher PF contributions (good for long-term savings) but also higher taxable income. A lower basic with higher special allowances gives slightly more in-hand pay. Most companies fix basic at 40% to balance both.

Is the PF amount included in CTC?

Yes — both the employer's PF contribution (12% of basic) and the employee's PF contribution are part of the CTC structure. The employer's PF goes directly to EPFO from the employer; the employee's PF is deducted from your gross salary each month. Both reduce your in-hand pay relative to your CTC number.

What is TDS on salary and how is it calculated?

TDS (Tax Deducted at Source) on salary is the income tax your employer deducts monthly. It is calculated on your projected annual taxable income after declared deductions. Under the new regime FY 2025-26, income up to ₹12 lakh (after ₹75K standard deduction) is nil-tax. If your CTC is ₹12.75 lakh or below and you opt for the new regime, your monthly TDS should be zero.

Can I negotiate salary in CTC or in-hand terms?

Always negotiate in CTC terms — this is the total employer cost and covers all components. However, ask for the breakup during negotiation. A CTC with high fixed pay (basic + special allowance) is generally better than one that is inflated by stock options or variable pay that may not be guaranteed. Verify the actual in-hand with this calculator before accepting any offer.

CTC to In-Hand Salary Calculator

★★★★★4.8|👁10,000+ uses|📅Updated Apr 2026

✍Reviewed by CA Ramesh Iyer, CFP

CTC vs In-Hand Salary — What Is the Difference?

In India, companies quote salaries as CTC (Cost to Company) — the total annual expense the employer bears for you. But your monthly bank credit (in-hand or take-home salary) is significantly lower because CTC includes components that you never directly receive: employer PF contribution, gratuity provision, medical insurance premium, and sometimes meal vouchers.

This calculator breaks down any CTC into its components and shows your true monthly in-hand salary after all deductions — using the standard Indian salary structure and FY 2025-26 New Regime tax slabs.

Enter Details

Annual CTC (₹)₹12,00,000

₹

₹1,00,000₹10,00,00,000

City Type

Opt Out of PF?

∑Formula

Monthly In-Hand = Gross Salary − Employee PF (12% of Basic) − Professional Tax (₹200) − TDS

Gross = Basic (40% CTC) + HRA (50/40% of Basic) + Special Allowance

CTC = Gross + Employer PF + Gratuity Provision

Example Calculations

3 examples

Inputs

Annual CTC (₹)₹6,00,000

City TypeMetro City

Opt Out of PF?No — I contribute to PF

Results

Monthly In-Hand₹40,843

Annual In-Hand₹4,90,116

Monthly Gross Salary₹43,000

Basic Salary₹20,000

HRA₹10,000

Special Allowance₹13,000

Employee PF₹1,800

Professional Tax₹200

Monthly TDS (Estimated)₹0

Total Deductions₹2,000

Step-by-Step

₹6 LPA CTC in a metro city: Monthly gross ≈ ₹43K, Employee PF ₹1,800, PT ₹200, zero TDS (income under ₹12L limit). In-hand ≈ ₹40,843/month.

Click any example to expand and see step-by-step workings. Use "▶ Load this example" to auto-fill the calculator.

CTC Breakup — How Indian Salaries Are Structured

Component	% of CTC	Remarks
Basic Salary	40%–50%	Taxable; base for PF, HRA, Gratuity
HRA	40–50% of Basic	Partly tax-free if you pay rent (old regime)
Special Allowance	Filler (variable)	Fully taxable
Employer PF	12% of Basic (max ₹1,800/mo)	Goes to EPFO; not in gross salary
Gratuity Provision	4.81% of Basic	Paid out only after 5 yrs service
Medical / Insurance	Variable	May or may not be part of CTC

Deductions from Gross Salary

Employee PF (12% of Basic, capped at ₹1,800/month): Goes to your EPFO account. You can withdraw it after leaving the job (after certain conditions). This is your money — but locked.
Professional Tax (₹200/month in most states): State government tax on employment. Varies: Maharashtra ₹200/month, Karnataka ₹200/month, West Bengal slabs, Tamil Nadu nil for some categories.
TDS (Income Tax at Source): Your employer deducts tax monthly based on your projected annual tax liability. Declare your regime choice (new/old) and investments to avoid excess TDS.

Tips to Increase Your In-Hand Salary

🇮🇳

Choose the right tax regime

At lower CTCs (under ₹8–10L), new regime often gives more in-hand; at higher CTCs with high deductions (80C + HRA + 80D), old regime may save more.

🇮🇳

Opt out of PF if eligible

If your basic salary is above ₹15,000/month and you are not in a PF-mandatory sector, you can opt out — saving ₹1,800/month in deduction (though you lose the employer's ₹1,800 contribution too).

🆓

Flexible benefits

Many companies offer meal vouchers, LTA, NPS top-up, and fuel reimbursement as tax-free components — restructuring salary through these can increase in-hand pay.

✨

Declare HRA if paying rent

Under the old regime, a well-declared HRA can reduce your monthly TDS significantly.

Frequently Asked Questions

For ₹10 LPA CTC in a metro city (with PF, new regime): Monthly gross ≈ ₹71,800. Deductions: PF ₹1,800 + PT ₹200 + TDS ≈ ₹0 (income after deductions ≈ under ₹12L threshold). Estimated monthly in-hand: approximately ₹69,800–₹71,000. Use the calculator above for an exact figure based on your specific salary structure.

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