CTC vs In-Hand Salary: Why Your Take-Home Is Lower

• Employer PF: 12% of basic (often limited to a wage ceiling of ₹25,000 a month). It goes into your EPF account — your money, but not take-home pay.
• Gratuity: many employers include a provision of about 4.81% of basic in CTC. It is paid when you leave after the qualifying period of service.
• Variable pay / bonus: depends on company and individual performance and is usually paid quarterly or annually.
• Insurance and other benefits: group health cover, meal cards, etc., if the employer includes their cost in CTC.

• Employee PF: matches the employer contribution, typically 12% of basic or of the ceiling.
• Professional tax: a state tax of up to ₹2,500 a year, deducted monthly in states that levy it.
• Income tax (TDS): your employer estimates your annual tax and deducts it across the year. Under the New tax regime (default) for FY 2026-27, there is no tax on taxable income up to ₹12 lakh because of the tax rebate, and salaried people get a ₹75,000 standard deduction.

Try your own numbers in the CTC to In-Hand Salary Calculator.

1. What is the fixed pay, and how much of the CTC is variable?
2. How has variable pay actually been paid out in recent years?
3. Is PF calculated on full basic or on the statutory ceiling?
4. Are gratuity and insurance premiums included in the CTC figure?

Up to about ₹12 lakh CTC, taxable salary usually stays under the ₹12 lakh rebate limit, so the gap between CTC and in-hand is mainly PF and gratuity. Above that, income tax becomes the biggest deduction. For a line-by-line example, read ₹12 LPA in-hand salary.

The PF basis makes the biggest difference. The PF ceiling rose to ₹25,000 from 17 September 2026 — see what the new PF ceiling changes.

An offer letter's annexure usually lists components like this. Group them into three buckets to see what you'll actually receive:

A joining bonus shown inside first-year CTC inflates the headline number and disappears in year two. Ask whether it has to be repaid if you leave early.

Under the new tax regime — the default — HRA exemption, LTA and most deductions are not available. Your HRA is simply part of taxable salary; the ₹75,000 standard deduction and the rebate up to ₹12 lakh of taxable income do the work. If you pay high rent and have large deductions, compare the old regime with your employer's payroll team or a tax adviser before choosing.

1. Convert both offers to monthly in-hand with the same assumptions in the CTC to In-Hand Salary Calculator.
2. Separate guaranteed pay from variable pay and one-time bonuses.
3. Add the value of benefits you'd otherwise buy yourself, such as family health insurance.
4. Compare the long-term savings too: a higher PF contribution lowers take-home pay but builds your EPF balance.
5. Use the Salary Hike Calculator to see the real percentage increase over your current pay.

Professional tax is levied by states, not the central government, and is capped at ₹2,500 a year. Rates and slabs differ by state, and some states — Delhi, for example — don't levy it at all. Employers deduct it monthly according to your work location's rules.

TDS is your estimated annual income tax spread over the months left in the year. At ₹15 lakh CTC with the structure above, annual tax is ₹87,382, or about ₹7,282 a month if spread evenly. Employers recalculate as the year goes on — after a raise, a bonus or a change in your declarations — so the monthly amount can rise or fall. Your Form 16 at year-end shows the final tax deducted.