How to Use the CTC to In-Hand Calculator
Enter your annual CTC and adjust the basic salary percentage (default 40%). The calculator derives HRA, PF, gratuity, and computes in-hand salary under both new and old tax regimes. It automatically recommends the better regime.
CTC to In-Hand Calculator Formula
In-Hand = (Gross − Employee PF − Prof. Tax − Annual Tax) ÷ 12Gross= CTC minus employer PF and gratuityEmployee PF= min(Basic × 12%, ₹21,600/year)Gratuity= Basic × 4.81%
Example Calculation
CTC = ₹12 lakh, basic 40%, new tax regime:
Basic=₹4.8L; Employer PF=₹21,600; Gratuity=₹23,088; Gross=₹9,55,312; Employee PF=₹21,600; PT=₹2,400; Taxable=₹9,31,312; New regime tax≈₹0 (87A rebate for ≤₹12L)
Monthly in-hand ≈ ₹77,609
CTC vs In-Hand: Why the Gap Exists
CTC — Cost to Company — is the total annual amount your employer spends on you. It is not what lands in your bank account. The number on your offer letter bundles in several costs you never receive as monthly cash: the employer's contribution to your provident fund, gratuity set aside for the future, and sometimes notional benefits like insurance premiums. In-hand salary is what remains after these are removed and statutory deductions are applied. For most Indian salaried employees, in-hand works out to roughly 65–80% of CTC.
Understanding the breakdown matters most at two moments: when you compare two job offers, and when you plan a budget. A higher CTC with a fat employer-PF and large variable component can deliver less monthly cash than a lower CTC that is mostly fixed.
What Gets Deducted From Your CTC
- Employer PF: typically 12% of basic, capped around ₹21,600/year on the ₹15,000 statutory wage ceiling. Part of CTC but never paid to you monthly.
- Gratuity: about 4.81% of basic, payable only after 5 years of service.
- Employee PF: another 12% of basic deducted from your salary (this is your own retirement saving, not lost money).
- Professional tax: a small state levy, commonly ₹200/month (₹2,400/year).
- Income tax (TDS): deducted monthly based on your projected annual tax.
Notice that two of these — employer PF and gratuity — are part of CTC but invisible in your monthly account, while employee PF leaves your salary but stays your money. That distinction is the single biggest source of confusion when people first see their payslip.
The Role of Basic Salary
How your CTC is split matters. A higher basic salary increases your PF contributions (good for long-term retirement savings, but lower monthly cash) and raises HRA and gratuity, which are linked to basic. A lower basic boosts your immediate take-home but shrinks your forced retirement savings. Indian employers typically set basic at 40–50% of CTC. There is no universally right answer — younger employees often prefer more cash now, while those focused on retirement may welcome the higher PF a larger basic forces.
Tax Regime Changes Your Take-Home
Your in-hand figure depends heavily on which tax regime you choose. Under the new regime, income up to ₹12 lakh attracts effectively zero tax thanks to the enhanced Section 87A rebate, plus a ₹75,000 standard deduction for salaried employees — so for many mid-salary earners the new regime maximises take-home with no paperwork. The old regime can still win if you have large deductions (80C, HRA, home-loan interest) above roughly ₹3.75 lakh. Use the income tax calculator to compare both before you finalise, and re-check each financial year as slabs change.
Frequently Asked Questions
What is CTC and how does it differ from in-hand salary?
CTC (Cost to Company) is the total annual expense an employer incurs for an employee. In-hand salary is what you actually receive monthly after deducting PF, gratuity, TDS, and professional tax. In-hand is typically 65–80% of CTC.
How is professional tax calculated?
Professional tax varies by state. Most states charge ₹200/month (₹2,400/year). Maharashtra charges ₹200/month for salaries above ₹10,000.
What is the zero tax limit under new regime FY 2025-26?
Under the new tax regime (IT Act 2025), individuals with total income up to ₹12 lakh pay zero income tax due to the enhanced Section 87A rebate of ₹60,000.
Sources
All calculations run in your browser and are provided for information only — they are not investment, tax or legal advice. Verify current rates and rules with the official source above before acting.
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