How CTC becomes in-hand salary
Your offer letter's CTC is not what you'll receive each month. The calculator works through the same steps your payroll team does:
- Remove employer-side costs. Employer PF (12% of basic), employer ESI (if applicable) and gratuity (if included) are part of CTC but never paid to you monthly. What's left is your gross salary.
- Split gross into components. Basic (typically 40–50% of CTC), HRA (40–50% of basic) and a special allowance that makes up the balance.
- Subtract employee deductions. Employee PF (12% of basic), employee ESI (0.75%, only if gross is ₹21,000 a month or less), state professional tax and income tax deducted at source.
- The remainder is your in-hand salary.
Worked example
A ₹12 lakh CTC in Maharashtra with basic at 50%: basic is ₹6,00,000, so employer PF is ₹72,000 and gross salary is ₹11,28,000. Deduct employee PF of ₹72,000 and professional tax of ₹2,500. Under the new regime, taxable income after the ₹75,000 standard deduction is ₹10,53,000 — below ₹12 lakh, so income tax is nil. In-hand comes to about ₹87,792 a month.
Ways to increase your take-home pay
- Ask for PF on the ₹15,000 wage ceiling. Contributing ₹1,800 a month instead of 12% of full basic raises in-hand pay — at the cost of lower retirement savings.
- Use employer NPS. Contributions under 80CCD(2) (up to 14% of basic in the new regime) are deductible in both regimes.
- Claim tax-free reimbursements such as telephone, internet and books where your employer offers them.
- Compare regimes. If you pay high rent or a home loan, the old regime may save more — check with the income tax calculator.
Professional tax by state
Professional tax is capped at ₹2,500 a year. Maharashtra, Tamil Nadu, Kerala and Madhya Pradesh charge up to ₹2,500; Karnataka, West Bengal, Telangana, Andhra Pradesh and Gujarat up to ₹2,400 (₹200 a month). Delhi, Haryana, Uttar Pradesh and Rajasthan don't levy it on salaries. Lower slabs apply to smaller salaries in most states — this calculator uses the top slab.
Frequently asked questions
What is the difference between CTC and in-hand salary?
CTC (Cost to Company) is the total your employer spends on you, including employer PF, gratuity and sometimes insurance or bonuses. In-hand (take-home) salary is what reaches your bank account after employee PF, professional tax, income tax (TDS) and other deductions.
How is PF calculated on salary?
Both employee and employer contribute 12% of basic salary (plus DA) to EPF. Many employers cap this at 12% of ₹15,000 (₹1,800 a month), the statutory wage ceiling; others contribute on the full basic.
Who has to pay ESI?
ESI applies to employees whose gross monthly wages are ₹21,000 or less. The employee contributes 0.75% and the employer 3.25% of gross wages.
What is professional tax?
Professional tax is a state-level tax on employment, capped at ₹2,500 a year by the Constitution. Rates and slabs vary by state; some states like Delhi don't levy it.
Why is my actual in-hand different from this estimate?
Salary structures vary: variable pay, meal cards, reimbursements, insurance premiums, NPS and the exact tax declarations you submit all change your monthly take-home. Treat this as a close estimate.
Last updated: 22 September 2026Suggest an improvement · Report a problem