Salary Calculator (CTC to In-Hand)

CTC (Cost To Company) is the total your employer spends on you each year — salary, PF, insurance, food coupons, leave encashment, the works. It is not what lands in your bank. The gap between the two is explained by deductions that are part of your cost but not your take-home pay, and that gap is where most offer-letter surprises hide.

The journey from CTC to in-hand

1. Basic + HRA + special allowance make up your salary structure. Basic is typically 40–50% of CTC — it matters because PF and gratuity are calculated on it.
2. Employer PF — 12% of basic (up to the ₹15,000/month wage cap) is paid by your employer and goes to your provident fund, not your salary.
3. Gratuity accrual — your employer sets aside ~4.81% of basic each year for your gratuity.
4. Gross salary = CTC − employer PF − gratuity accrual.
5. Employee deductions — your own 12% PF contribution, professional tax (about ₹200/month), and income tax.
6. In-hand salary = gross − employee PF − professional tax − income tax.

Worked example

CTC = ₹12,00,000, basic = 40% (₹4,80,000), new regime:

• Employer PF ≈ ₹21,600/yr; gratuity accrual ≈ ₹0 (under 5 years)
• Gross annual ≈ ₹11,78,400 → gross monthly ≈ ₹98,200
• Income tax ≈ ₹0/yr — the 87A rebate makes taxable income under ₹12 lakh tax-free
• Employee PF ≈ ₹1,800/month; professional tax ≈ ₹200/month
• In-hand ≈ ₹96,200/month — about ₹80,000 less than the ₹1,00,000 "monthly" figure people quote from a ₹12 lakh CTC

The CTC inflation trick

When an offer says "₹12 lakh CTC", employers are counting employer PF, insurance premiums, gratuity, and even cab/food allowances that you may not actually pocket. Two identical CTC offers can deliver very different in-hand pay depending on how the breakup is structured. That is the single most important reason to run this calculator with the actual breakup before accepting.

Why your basic matters

A higher basic raises your PF and gratuity (good for long-term savings) but can push up taxable income. Offer letters often keep basic around 40–50%, HRA near 40–50%, and the rest as special allowance. Some employers also deduct a special allowance or ESI (if your gross is under ₹21,000/month) which further reduces in-hand.

The PF cap in action

PF is capped at 12% of ₹15,000 basic — so once your monthly basic crosses ₹15,000, your PF contribution freezes at ₹1,800 while your actual basic keeps climbing. A ₹40,000 monthly basic therefore generates the same ₹1,800 PF as a ₹15,000 one. High earners "lose" this deduction; your total PF ends up a modest fraction of your CTC.

Regime choice matters

In this example the new regime nets ₹0 tax on the taxable slice. Under the old regime with ₹1,50,000 of 80C deductions, taxable income lands at about ₹9.78 lakh and the tax climbs to roughly ₹1,12,500 after cess — in this salary band the new regime wins by more than ₹1 lakh a year. Run the calculator both ways: for most salaried employees without big deductions, the new regime is now the better default, but the old regime still wins for those with heavy 80C/80D/HRA claims.