CTC to In-hand Salary: How to Calculate Your Take-home Pay

Your offer letter says ₹12 lakh CTC. Your bank account gets about ₹82,000 a month. Here is where the rest goes, line by line.

Step 1: Take out what isn't paid monthly

CTC (cost to company) includes amounts your employer spends on you that you don't receive as salary each month:

• Employer PF: usually 12% of basic, or ₹1,800 a month if calculated on a capped basic of ₹15,000
• Gratuity: about 4.81% of basic, paid only when you leave after five years
• Insurance and other benefits: group health cover, meal cards, and so on
• Variable pay or bonus: paid quarterly or yearly, often less than the full target

What remains is your gross salary.

Step 2: Deductions from gross salary

• Employee PF: 12% of basic (or ₹1,800 a month on the capped basic)
• Professional tax: up to ₹2,500 a year, depending on your state
• Income tax (TDS): based on your regime and taxable income

Step 3: Work out income tax for FY 2026-27

New regime (the default): ₹75,000 standard deduction, then 5% from ₹4 lakh, rising by 5% every ₹4 lakh up to 30% above ₹24 lakh. If taxable income is up to ₹12 lakh, a rebate makes the tax zero. Just above ₹12 lakh, marginal relief caps the tax at the amount by which income crosses ₹12 lakh. Add 4% cess.

Old regime: ₹50,000 standard deduction plus deductions like 80C, 80D, HRA exemption and home loan interest; slabs of 5%, 20% and 30%; rebate up to ₹5 lakh.

A worked example

CTC ₹12 lakh: basic ₹5.4 lakh, employer PF ₹21,600, gratuity ₹25,974, insurance ₹6,426, variable pay ₹60,000.

• Gross salary = ₹12,00,000 − ₹21,600 − ₹25,974 − ₹6,426 = ₹11,46,000
• Employee PF ₹64,800, professional tax ₹2,500
• New regime taxable income = ₹11,46,000 − ₹75,000 = ₹10,71,000: below ₹12 lakh, so tax is zero
• Take-home in the year ≈ ₹10,78,700, of which ₹60,000 is variable pay
• Monthly in-hand ≈ ₹84,900 before any variable pay

How to read a hike

A 15% CTC hike can become a 12% in-hand hike if it pushes you over ₹12 lakh taxable income, or if much of it is variable pay. Always compare in-hand to in-hand, and check which regime is better at the new salary.

Negotiating tips

1. Ask for the CTC breakup, not just the total.
2. Fixed pay is worth more than the same amount of variable pay.
3. A higher basic raises PF and gratuity (good for savings) but lowers monthly in-hand.

Our Salary Hike & In-hand Salary Calculator does all of this for your current and new CTC side by side, with FY 2026-27 tax rates and a regime check.