What is CTC vs in-hand salary?

CTC (Cost to Company) is the total annual cost a company spends on an employee - including basic salary, allowances, employer contributions to PF and gratuity, bonus, insurance, and other benefits. In-hand salary (also called take-home or net salary) is what actually arrives in your bank account each month after all deductions. The gap between CTC and in-hand is typically 25-35% - you take home roughly ₹70-75 of every ₹100 of CTC. Most Indian job offers quote CTC, which can be misleading if you're new to the workforce. This calculator decodes your CTC into the actual monthly cash you'll receive, breaking down employer PF, employee PF, gratuity, professional tax, and income tax separately under both the New Tax Regime (default for FY 2025-26) and Old Tax Regime (with deductions).

How to use this tool

1. Enter your CTC — The annual CTC number from your offer letter (in ₹). This is your total cost to the company.
2. Enter variable / bonus % — Performance-linked bonus or variable pay (typically 5-25% of CTC). This is paid annually or quarterly, not monthly, so it's separated from monthly in-hand calculation.
3. Select PF contribution — 12% of basic salary (standard - applies to most companies with 20+ employees). Choose 'None' if you're at a small startup or freelance contract.
4. Pick tax regime — New Regime (default, fewer deductions but lower slabs) or Old Regime (with 80C, HRA, home loan, insurance deductions). For most salaried Indians in 2026, New Regime works out cheaper.
5. Read monthly in-hand — The result shows your monthly take-home, annual in-hand, gross annual, EPF contribution, income tax, and professional tax breakdown.

Salary calculation breakdown

Starting from CTC, here's how in-hand is derived:

1. Bonus separated: Annual fixed = CTC - (CTC × bonus%)
2. Basic salary: Usually 40-50% of annual fixed pay (this calculator uses 40%)
3. Employer PF: 12% of basic - paid by employer (already in CTC, not received by you)
4. Gratuity: ~4.81% of basic - reserved by company, paid only after 5 years of service
5. Gross salary = CTC - Employer PF - Gratuity
6. Employee PF: 12% of basic - deducted from your gross
7. Professional tax: ₹2,400/year flat (most Indian states)
8. Income tax: Per slab (calculated on taxable income after deductions)
9. In-hand = Gross - Employee PF - Professional Tax - Income Tax

Example: ₹10 lakh CTC, no bonus, 12% PF, New Regime:

• Basic = ₹4 lakh; Employer PF = ₹48K; Gratuity = ₹19.2K
• Gross = ₹9.32 lakh
• Employee PF = ₹48K; PT = ₹2.4K
• Taxable income = ₹9.32L - ₹75K (std deduction) = ₹8.57L
• Income tax: 5% on ₹3-7L + 10% on ₹7-8.57L = ₹20K + ₹15.7K = ₹35.7K + 4% cess = ₹37.1K
• In-hand annual = ₹9.32L - ₹48K - ₹2.4K - ₹37.1K = ₹8.45 lakh
• Monthly in-hand = ~₹70,400

Examples

• ₹5 lakh CTC (entry-level): ~₹40,000/month in-hand
• ₹10 lakh CTC (mid-level): ~₹70,000/month
• ₹15 lakh CTC (senior): ~₹1 lakh/month
• ₹20 lakh CTC: ~₹1.3 lakh/month
• ₹30 lakh CTC: ~₹1.85 lakh/month
• ₹50 lakh CTC: ~₹3 lakh/month (higher tax slab)

Note: at higher CTCs, tax brackets reduce the in-hand percentage. CTC of ₹50 lakh has roughly 70% in-hand ratio while ₹10 lakh has ~80%.

Tips & best practices

• Always ask about variable/bonus % - if it's 20% of CTC, your guaranteed monthly is much less than the stated CTC suggests
• Compare offers by IN-HAND salary, not CTC - one company offering ₹12 lakh CTC may give less in-hand than another offering ₹11 lakh
• New Tax Regime is usually better unless you have deductions of ₹3+ lakh (home loan interest + 80C + 80D)
• Increase 80CCD(1B) NPS contribution by ₹50,000 if in Old Regime - it's an extra deduction beyond 80C
• Salary structure (basic vs HRA vs special allowance) matters for tax - higher HRA helps if you pay rent above ₹15K/month
• Ask for tax-friendly components: NPS employer contribution (10% of basic, fully tax-deductible), meal coupons (₹26,400/year tax-free), telephone reimbursement, fuel reimbursement
• Don't take 'leave encashment' deals at low CTC - encashed leave is fully taxable as salary in the year received

Limitations & notes

This calculator gives estimates only. Actual in-hand depends on company-specific salary structure (some companies have higher basic %, some lower), HRA depending on rent paid and city, LTA claims, allowances structure, insurance premiums deducted, and any company-specific deductions. For exact calculations, ask HR for a detailed CTC breakup or use your offer letter's salary structure section. Tax slabs change annually - this calculator uses FY 2025-26 (AY 2026-27) rates.

Frequently Asked Questions

How is in-hand salary calculated from CTC?

CTC - (employer PF + gratuity) = Gross. Gross - (employee PF + professional tax + income tax) = In-hand. Typically you take home 70-80% of CTC. Higher CTCs lose more to tax (lower in-hand %).

Which is the best tax regime for me?

Use both regime calculations side-by-side. New regime is usually better for income under ₹15 lakh OR if you have no major deductions. Old regime wins if you have ₹3+ lakh in deductions (home loan interest + 80C + insurance + HRA). The calculator shows both - pick whichever is lower.

What is variable pay / performance bonus?

Annual bonus tied to your performance and company performance. Usually 5-25% of CTC. Paid quarterly or annually - not part of monthly in-hand. May not be guaranteed - if you or the company underperforms, you may receive less or none. Always verify the historical payout percentage before joining.

Why is my actual in-hand sometimes less than this calculator shows?

Possible reasons: company-specific deductions (health insurance premium, meal cards, telephone), higher HRA reducing taxable income but also reducing your liquid cash, your specific tax-saving investments not entered, joining bonus / sign-on counted in CTC but paid as one-time, professional tax slightly different in your state.

Is PF mandatory?

PF (Provident Fund) is mandatory if your company has 20+ employees and your basic salary is under ₹15,000 (the EPF wage ceiling). Above that ceiling, PF is optional - you can opt out if both you and employer agree. Most full-time jobs have PF; freelancers and contractors don't.

Can I withdraw my PF?

Yes, but with rules. Full withdrawal allowed after retirement (58), or after 2 months of unemployment. Partial withdrawal for specific purposes: house purchase (after 5 years of service), medical emergency, marriage, education. Withdrawn PF is tax-free if you've been a member for 5+ years; otherwise taxed at your slab rate.

What's the difference between Gross and Net salary?

Gross salary = CTC minus employer PF and gratuity. It's what appears on your payslip as monthly gross. Net salary = Gross minus your own deductions (employee PF, professional tax, income tax). Net is what hits your bank account.

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