You accept an offer of ₹12 lakh CTC, divide by 12 and expect ₹1 lakh a month. Then the first salary arrives and it is closer to ₹94,000. Nothing is wrong — CTC (cost to company) is everything your employer spends on you, not what lands in your bank account.
Try the calculatorSalary Calculator India (CTC to In-Hand)CTC to monthly take-home→What is inside your CTC
A typical Indian CTC has two parts:
- Gross salary — paid to you every month: basic pay, HRA, special allowance and other allowances.
- Employer costs that are not paid monthly — the employer's PF contribution, gratuity, and sometimes group insurance, meal cards or a variable bonus.
Then, from the gross salary, three things are deducted before you are paid:
- Your own PF contribution — 12% of basic pay (many employers cap this at a basic of ₹15,000 a month, which is ₹1,800 a month).
- Professional tax — a state tax of up to ₹2,500 a year (zero in some states, such as Delhi).
- Income tax (TDS) — based on the tax regime you choose.
Example: ₹12 lakh CTC
Assumptions: basic pay is 50% of CTC, PF capped at ₹15,000 basic, gratuity included in CTC, professional tax ₹2,400, new tax regime.
| Item | Per year |
|---|---|
| CTC | ₹12,00,000 |
| Minus employer PF | – ₹21,600 |
| Minus gratuity (4.81% of basic) | – ₹28,860 |
| Gross salary | ₹11,49,540 |
| Minus your PF | – ₹21,600 |
| Minus professional tax | – ₹2,400 |
| Minus income tax | ₹0 |
| In-hand salary | ₹11,25,540 (₹93,795 a month) |
Income tax is zero here because taxable income is below ₹12 lakh after the ₹75,000 standard deduction, so the Section 87A rebate applies.
In-hand salary at different CTCs
Same assumptions as above:
| CTC | Income tax per year | In-hand per month |
|---|---|---|
| ₹6 lakh | ₹0 | ₹44,998 |
| ₹12 lakh | ₹0 | ₹93,795 |
| ₹18 lakh | ₹1,37,303 | ₹1,31,151 |
| ₹25 lakh | ₹2,97,252 | ₹1,74,752 |
Your own figure will differ if your basic pay share is different, PF is calculated on full basic, part of your CTC is variable, or you choose the old tax regime. Enter your own numbers in the salary calculator.
Things that quietly reduce your in-hand pay
- Variable pay shown in CTC but only paid yearly (and only if targets are met).
- PF on full basic instead of the ₹15,000 cap — more savings, less cash in hand.
- Insurance premiums for family members, deducted monthly.
- Joining or retention bonuses that are included in the first-year CTC but never repeat.
Ways to increase take-home (legally)
- Pick the right tax regime. Compare both in the income tax calculator.
- Ask for employer NPS contribution — it is deductible even in the new regime (80CCD(2)).
- Check the PF basis. If your employer allows it, PF on the capped basic increases monthly cash (but reduces long-term savings).
- In the old regime only: claim HRA, LTA and food or fuel allowances through flexible benefit plans.
Don't forget the money you don't see
Employer PF and gratuity are not "lost". PF grows tax-free in your EPF account, and gratuity is paid when you leave after five or more years of service. See how they add up with the EPF calculator and gratuity calculator.
This article is general information, not personal financial, tax or legal advice. Rules and rates change — check the latest figures with an official source or a qualified adviser. Read our disclaimer.