CTC to In-Hand Salary Calculator
Decode your offer letter. See monthly take-home after PF, taxes, and deductions.
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Understanding CTC vs In-Hand Salary
When you receive a job offer with a ₹12 LPA CTC, you might expect ₹1 lakh per month in your bank. The reality? Probably around ₹75,000-85,000. The difference isn't a trick—it's the gap between what the company spends on you (CTC) and what reaches your bank account (In-Hand).
CTC (Cost to Company) includes employer PF contribution, gratuity provisioning, insurance, variable pay, and other benefits that don't appear as cash in your monthly payslip. Your Gross Salary is what shows in the payslip before deductions, and Net In-Hand is what remains after PF, Professional Tax, and Income Tax are deducted.
The Journey: CTC → In-Hand
Key Salary Components Explained
Basic Salary (40-50% of Fixed CTC)
The core component. PF, gratuity, and HRA are all calculated as percentages of Basic. Higher Basic = More PF savings but less take-home. Companies often keep it at 40% to minimize PF liability.
HRA (40-50% of Basic)
House Rent Allowance. 50% of Basic in Metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% elsewhere. In old tax regime, HRA can be tax-exempt if you pay rent and submit rent receipts.
Provident Fund (12% + 12%)
12% of Basic deducted from your salary (Employee PF). Employer also contributes 12% (part of CTC, not in payslip). This is your retirement savings with ~8% interest. Wage ceiling: ₹15,000/month.
Income Tax (TDS)
Tax deducted at source based on estimated annual tax. New regime has lower rates but no exemptions. Old regime allows 80C, HRA, and other deductions. Our calculator compares both.
New Tax Regime vs Old Tax Regime (FY 2024-25)
| Aspect | New Regime (Default) | Old Regime |
|---|---|---|
| Standard Deduction | ₹75,000 | ₹50,000 |
| Section 80C (PPF, ELSS, LIC) | ❌ Not Allowed | ✓ Up to ₹1.5 Lakh |
| HRA Exemption | ❌ Not Allowed | ✓ Based on rent paid |
| Rebate (Zero Tax) | Up to ₹7 Lakh taxable income | Up to ₹5 Lakh taxable income |
| Tax Slabs | 0-3L: 0%, 3-7L: 5%, 7-10L: 10%, 10-12L: 15%, 12-15L: 20%, >15L: 30% | 0-2.5L: 0%, 2.5-5L: 5%, 5-10L: 20%, >10L: 30% |
| Best For | No investments, no rent, simplicity | High rent, maxed 80C, home loan |
Rule of Thumb: If your total deductions (80C + HRA + 80D + Home Loan) exceed ₹3-4 Lakh, old regime may save more tax. Otherwise, new regime with its lower rates is usually better. Our calculator compares both and recommends the optimal choice.
Example: ₹15 LPA CTC Breakdown
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Frequently Asked Questions
Why is my in-hand salary so much less than CTC?
CTC (Cost to Company) includes everything the employer spends on you—not just salary. It includes: (1) Employer's PF contribution (12% of Basic, part of CTC but not in your payslip), (2) Gratuity provisioning (typically 4.81% of Basic), (3) Insurance premiums, (4) Variable/Bonus that may not be guaranteed, (5) Other benefits like food coupons, gym subsidies. Only the 'Gross Salary' portion appears in your payslip, and after deducting Employee PF, Professional Tax, and Income Tax, you get 'In-Hand'. For a ₹12 LPA CTC, expect roughly ₹75,000-85,000/month in hand depending on structure and tax regime.
What is the difference between CTC, Gross Salary, and In-Hand Salary?
CTC = Total cost to employer (includes employer PF, gratuity, insurance, variable). Gross Salary = What appears in your payslip before deductions (Basic + HRA + Special Allowance). Net In-Hand = What you receive in bank after deducting Employee PF, Professional Tax, and TDS. Example: CTC ₹15 LPA → Gross ₹1,05,000/month → In-Hand ₹82,000/month (approximately).
What is Basic Salary and why is it important?
Basic Salary is the core component of your salary structure, typically 40-50% of Fixed CTC. It's crucial because: (1) PF is calculated as 12% of Basic, (2) Gratuity is calculated on Basic, (3) HRA is 40-50% of Basic, (4) Leave encashment is based on Basic. Higher Basic = Higher PF contribution = More retirement savings but less take-home. Companies often keep Basic low (around 40%) to reduce PF liability, while employees prefer 50% for better retirement benefits.
How is PF (Provident Fund) calculated?
Employee PF: 12% of Basic Salary (deducted from your payslip). Employer PF: 12% of Basic Salary (part of CTC, not in payslip). Wage Ceiling: PF is mandatory only on first ₹15,000 of Basic. If Basic > ₹15,000, PF can be calculated on actual Basic or capped at ₹1,800/month—depends on company policy and whether you opted for restricted PF. Employer's 12% is split: 8.33% goes to EPS (Pension) and 3.67% to EPF (Provident Fund).
New Tax Regime vs Old Tax Regime: Which is better?
New Regime (Default from FY 2024-25): Lower tax rates, Standard Deduction ₹75,000, Rebate up to ₹7 Lakh—but NO exemptions (no 80C, no HRA exemption). Old Regime: Higher rates but allows: Section 80C (₹1.5L), HRA exemption, 80D (medical insurance), home loan interest. Rule of thumb: If your total deductions exceed ₹3-4 Lakh, old regime may be better. If you don't have investments/rent, new regime is simpler and often saves tax. Our calculator shows both and recommends the better one.
What is HRA exemption and how does it work?
HRA (House Rent Allowance) is a salary component. In the Old Tax Regime, if you pay rent, part of HRA is tax-exempt. Exempt amount = Minimum of: (1) Actual HRA received, (2) 50% of Basic (Metro) or 40% (Non-Metro), (3) Rent paid minus 10% of Basic. Example: Basic ₹50,000, HRA ₹20,000, Rent ₹25,000, Metro city. Exempt = min(₹20,000, ₹25,000, ₹25,000-₹5,000) = min(₹20,000, ₹25,000, ₹20,000) = ₹20,000. This ₹20,000/month (₹2.4L/year) is tax-free in old regime. New regime does NOT allow HRA exemption.
What is Professional Tax?
Professional Tax is a state-level tax on employment income. Maximum is ₹2,500/year (capped by law). Most states charge ₹200/month (₹2,400/year). Some states like Rajasthan, Delhi, Uttar Pradesh don't have professional tax. It's a small deduction but appears in your payslip. Professional Tax paid is deductible from taxable income under both regimes.
What is Section 80C and what qualifies?
Section 80C allows up to ₹1.5 Lakh deduction from taxable income in the OLD regime. Qualifying investments: (1) Employee PF contribution (automatic), (2) PPF (Public Provident Fund), (3) ELSS (Equity-Linked Savings Scheme), (4) Life Insurance premiums, (5) NSC (National Savings Certificate), (6) Home loan principal repayment, (7) Tuition fees for children. If you're already contributing ₹21,600 to PF (₹1,800×12), you need ₹1,28,400 more in other investments to max out 80C. Note: 80C is NOT available in new tax regime.
What is the Standard Deduction?
Standard Deduction is a flat amount subtracted from Gross Salary before calculating tax—no proof required. FY 2024-25 limits: New Regime = ₹75,000 (increased from ₹50,000), Old Regime = ₹50,000. This is automatic and applies to all salaried employees. It replaced Transport Allowance and Medical Reimbursement that existed earlier. Combined with rebate, a person earning up to ₹7.75 Lakh (new regime) pays zero tax.
How accurate is this calculator?
This calculator provides estimates based on standard assumptions. Actual salary depends on: (1) Your company's specific salary structure, (2) Whether PF is calculated on full Basic or capped, (3) State-specific Professional Tax, (4) Additional deductions like ESI, LWF, (5) Variable components like bonus timing. Use this for comparing offers and planning—but verify with HR for exact figures. The tax calculation follows FY 2024-25 slabs and is reasonably accurate for estimation purposes.