CTC to In-Hand Salary Calculator

Understanding CTC vs In-Hand Salary in India

When you receive a job offer in India, the salary is typically quoted as CTC (Cost to Company). However, this is NOT the amount you'll receive in your bank account every month. Understanding the difference between CTC and in-hand salary is crucial for making informed career decisions and financial planning.

Complete Breakdown of Salary Components

1. Basic Salary (40-50% of CTC)

The basic salary is the core component of your compensation and typically constitutes 40-50% of your CTC. It's crucial because:

• PF (Provident Fund) is calculated as 12% of basic salary
• Gratuity is calculated based on basic salary
• Higher basic means higher PF contribution but lower take-home
• Many companies keep basic low to reduce PF liability

2. House Rent Allowance (HRA) - 40-50% of Basic

HRA is one of the most significant tax-saving components for salaried employees living in rented accommodation:

• Metro cities (Delhi, Mumbai, Chennai, Kolkata): 50% of basic salary
• Non-metro cities: 40% of basic salary
• Actual HRA exemption is the minimum of: Actual HRA received, 50%/40% of basic, or Rent paid minus 10% of basic

3. Provident Fund (PF) - 12% Each

Both employee and employer contribute 12% of basic salary to PF:

• Employee contribution: 12% of basic (deducted from salary)
• Employer contribution: 12% of basic (included in CTC)
• Maximum PF contribution is on basic salary up to ₹15,000/month
• Interest rate: 8.15% (FY 2023-24)

4. Gratuity (4.81% of Basic)

Gratuity is a retirement benefit payable after 5 years of continuous service:

• Formula: (15 × Last drawn salary × Years of service) / 26
• Maximum gratuity: ₹20 lakh (tax-free)
• Part of CTC but not paid monthly

5. Special Allowances

Companies include various allowances to structure salary tax-efficiently:

• Leave Travel Allowance (LTA): Tax-exempt for domestic travel twice in 4 years
• Medical Allowance: Up to ₹15,000 tax-exempt with bills
• Conveyance Allowance: For commuting expenses
• Food Coupons/Meal Cards: Tax-efficient benefit up to ₹50/meal

City-Wise Salary Comparison (2025)

Cost of living varies significantly across Indian cities. Here's what the same ₹10 LPA CTC means in different cities:

Income Tax Slabs 2024-25 (New vs Old Regime)

New Tax Regime (Default from FY 2023-24)

Old Tax Regime (With Deductions)

Detailed Salary Breakdown Examples

Example 1: ₹6 LPA CTC (Entry Level)

Example 2: ₹12 LPA CTC (Mid Level)

Example 3: ₹25 LPA CTC (Senior Level)

Expert Tax Saving Tips for Higher Take-Home

Frequently Asked Questions

What is the difference between CTC, gross salary, and net salary?

CTC (Cost to Company) includes everything the company spends on you - salary, PF, gratuity, insurance, etc.Gross Salary is CTC minus employer contributions (employer PF, gratuity, insurance).Net Salary (In-Hand) is what you receive after all deductions from gross (employee PF, tax, professional tax).

How much tax do I pay on ₹10 lakh CTC?

Under the new tax regime (2024-25), for ₹10 lakh CTC (assuming ₹8.5 lakh taxable income after standard deduction): you'll pay approximately ₹52,500 in income tax annually. Under the old regime with good deductions, it could be ₹0 to ₹30,000.

Is gratuity part of in-hand salary?

No, gratuity is part of CTC but NOT paid monthly. It's a retirement benefit paid only after completing 5 years of continuous service with the same employer, or upon retirement/resignation after eligibility.

Why is my in-hand lower than expected?

Common reasons include: (1) High PF deduction on higher basic, (2) Income tax TDS, (3) Professional tax, (4) Insurance premiums, (5) Recovery for salary advances, (6) Loan EMIs if salary-linked.

How can I increase my in-hand salary?

Strategies include: (1) Negotiate lower basic for higher allowances, (2) Opt out of voluntary PF above ₹15,000 basic, (3) Choose tax regime wisely, (4) Maximize tax-saving investments, (5) Restructure salary for tax-efficient components.

What is professional tax and who pays it?

Professional tax is a state-level tax on salaried individuals. It ranges from ₹200-₹2,500 per month depending on your state and income. States like Rajasthan, Haryana don't have professional tax.

Should freshers choose new or old tax regime?

For freshers with less than ₹12 LPA and minimal investments/rent, the new tax regime is usually better due to lower rates and no need to maintain investment proofs. Calculate both before deciding.

How does switching jobs affect tax calculation?

If you switch jobs mid-year, declare your previous income to the new employer via Form 12B. Otherwise, both employers may give exemptions separately, leading to tax shortfall during ITR filing.

Is bonus part of CTC or additional?

Performance bonuses are usually additional to CTC. However, some companies include "variable pay" or "target bonus" in CTC. Always clarify this during offer negotiation.

What's the maximum PF contribution limit?

The statutory limit is 12% of basic salary. For basic above ₹15,000/month, companies may cap PF at ₹1,800/month (12% of ₹15,000). Some allow voluntary higher contributions up to 12% of actual basic.