CTC vs In-hand Salary — Where the Difference Goes

What CTC contains

Cost to company adds together everything the employer spends on you: basic, HRA, special allowance, the employer's 12% PF contribution, a gratuity provision (4.81% of basic), and often group insurance, meal cards or variable pay. Only part of that is paid monthly.

From CTC to gross salary

Gross = CTC − Employer PF − Gratuity − other employer-only costs

Employer PF is 12% of basic. Many employers cap it at 12% of ₹15,000 (₹1,800 a month), the statutory wage ceiling; others pay 12% of full basic.

From gross to in-hand

• Employee PF — the same 12% of basic, deducted from you
• Professional tax — up to ₹2,500 a year, state-dependent
• Income tax (TDS) — based on your regime and declarations

Worked example: ₹12 lakh CTC

Basic 50% = ₹6,00,000. Employer PF (capped) ₹21,600; gratuity 4.81% = ₹28,860. Gross = ₹11,49,540. Taxable under the new regime = ₹10,74,540, which is below ₹12 lakh, so income tax is nil. In-hand = ₹11,49,540 − ₹21,600 PF − ₹2,400 PT = ₹11,25,540 a year, about ₹93,800 a month — 94% of CTC.

Open the Salary Calculator →

Negotiating with take-home in mind

Ask for the salary structure, not just the CTC. Check whether variable pay is guaranteed, whether PF is on full basic, and whether insurance is included. Two offers with the same CTC can differ by several thousand rupees a month in take-home.

• Get the component-wise salary break-up
• Check if PF is capped at ₹1,800/month
• Separate fixed from variable pay
• Run the numbers in the CTC to in-hand calculator