CTC vs gross vs in-hand salary
CTC (cost to company) is everything your employer spends on you — including money you never see in your bank account, like the employer's PF contribution. Gross salary is CTC minus those employer-side components. In-hand salary is what actually lands in your account each month: gross minus your own EPF contribution, income tax (TDS) and professional tax.
That is why a "₹12 lakh package" never means ₹1,00,000 a month. The honest chain is CTC → gross → taxable → in-hand, and each arrow removes something.
The exact model this calculator uses
- Basic salary = CTC × the basic % you set (default 40%).
- Employee PF = 12% of basic; employer PF = 12% of basic.
- Gross salary = CTC − employer PF, when employer PF sits inside CTC (the common structure). If your offer adds PF on top, switch the toggle to "No".
- Income tax on gross salary income, after the standard deduction (₹75,000 new regime / ₹50,000 old) and your old-regime deductions if selected, FY 2025-26 slabs, §87A rebate and 4% cess included.
- Monthly in-hand = (gross − employee PF − tax − professional tax × 12) ÷ 12.
The model assumes zero variable pay and no gratuity or insurance provision inside CTC. If your offer letter includes those, your real in-hand will be a little lower — read your CTC annexure line by line.
Worked example: 12 LPA in hand (FY 2025-26)
Take a ₹12,00,000 CTC with 40% basic, new regime, employer PF inside CTC:
| Step | Amount (₹ / year) |
|---|---|
| Basic salary (40% of CTC) | 4,80,000 |
| Employer PF (12% of basic, inside CTC) | −57,600 |
| Gross salary | 11,42,400 |
| Standard deduction (new regime) | −75,000 |
| Taxable income | 10,67,400 |
| Slab tax ₹46,740 − §87A rebate | 0 |
| Employee PF (12% of basic) | −57,600 |
| Professional tax (₹200 × 12) | −2,400 |
| Annual in-hand | 10,82,400 |
| Monthly in-hand | 90,200 |
Under the old regime with ₹1,50,000 of deductions, the same CTC pays about ₹1,05,019 in tax and ₹81,448 a month in hand — the new regime keeps roughly ₹8,750 more per month here.
What reduces your in-hand salary
Three deductions do almost all the damage. EPF: 12% of basic from your side, every month — at a ₹40,000 basic that is ₹4,800 (it is your money, just locked for retirement). Income tax: zero up to ₹12 lakh of taxable income under the new regime (as of FY 2025-26), then it climbs steeply. Professional tax: small (max ₹2,500 a year) but visible on every payslip in most states.
New labour code: why your basic may rise to 50%
The new wage-code definitions require "wages" — broadly basic + DA — to be at least 50% of total remuneration. Companies that keep basic at 30–40% today will have to raise it when the codes apply to them. A higher basic means higher PF on both sides, so monthly in-hand dips while retirement savings rise. As of June 2026, implementation timelines still vary by state and employer — use the basic % slider at 50% to preview the effect on your salary.