Tax & Salary
CTC vs In-Hand Salary: Why Your Take-Home Pay Is Lower
Every deduction between your CTC and your bank account, a worked ₹12 lakh example, and in-hand pay at common salary levels.
By Team Vind · Updated · 5 min read
Your offer letter says ₹12,00,000 CTC, so you expect ₹1,00,000 a month. Then the first salary arrives and it's closer to ₹85,000. Nothing has gone wrong: CTC (cost to company) counts everything the employer spends on you, including money you never get in your monthly salary. Here's where it goes.
From CTC to in-hand, step by step
Gross salary = CTC − employer's PF − gratuity · In-hand = gross − your PF − professional tax − income tax
For a ₹12,00,000 CTC with basic at 50%, full PF, gratuity in CTC, ₹2,500 professional tax and the new tax regime (FY 2026-27):
| Per month | Per year | |
|---|---|---|
| CTC | ₹1,00,000 | ₹12,00,000 |
| − Employer's PF (12% of basic) | ₹6,000 | ₹72,000 |
| − Gratuity (4.81% of basic) | ₹2,405 | ₹28,860 |
| = Gross salary | ₹91,595 | ₹10,99,140 |
| − Your PF (12% of basic) | ₹6,000 | ₹72,000 |
| − Professional tax | ₹208 | ₹2,500 |
| − Income tax | ₹0 | ₹0 |
| = In-hand salary | ₹85,387 | ₹10,24,640 |
So about ₹85,387 a month reaches your bank account, 85% of the CTC. The PF isn't lost: both shares go into your EPF account and earn 8.25% interest.
Try it: In-Hand Salary Calculator
Your Take-Home Pay
- In-hand₹10,24,640(85%)
- Income tax₹0(0%)
- PF (yours + employer's)₹1,44,000(12%)
- Gratuity₹28,860(2%)
- Professional tax₹2,500(0%)
Where your CTC goes
| Per month | Per year | |
|---|---|---|
| CTC | ₹1,00,000 | ₹12,00,000 |
| − Employer's PF | ₹6,000 | ₹72,000 |
| − Gratuity | ₹2,405 | ₹28,860 |
| = Gross salary | ₹91,595 | ₹10,99,140 |
| − Your PF | ₹6,000 | ₹72,000 |
| − Professional tax | ₹208 | ₹2,500 |
| − Income tax (new regime) | ₹0 | ₹0 |
| = In-hand salary | ₹85,387 | ₹10,24,640 |
What's inside a CTC
- Basic salary: usually 40–50% of CTC. PF and gratuity are worked out on it. Under the new labour codes, basic plus DA must be at least half of total pay.
- HRA and allowances: paid monthly. HRA can be partly tax-free in the old regime; see HRA exemption.
- Employer's PF: 12% of basic, paid into your EPF, not to you.
- Gratuity: 4.81% of basic, paid only if you stay 5 years. See gratuity rules.
- Variable pay and bonus: paid yearly or quarterly, and only if targets are met. Ask how much was actually paid out last year.
- Insurance and perks: group health insurance, meal cards and the like, valued at what they cost the employer.
In-hand salary at common CTCs
| CTC | In-hand per month | Share of CTC |
|---|---|---|
| ₹6,00,000 (6 LPA) | ₹42,589 | 85% |
| ₹10,00,000 (10 LPA) | ₹71,121 | 85% |
| ₹15,00,000 (15 LPA) | ₹1,00,299 | 80% |
| ₹20,00,000 (20 LPA) | ₹1,29,330 | 78% |
| ₹30,00,000 (30 LPA) | ₹1,80,685 | 72% |
Comparing tax regimes for your salary? Read old vs new tax regime.
Frequently asked questions
What is the in-hand salary for 12 LPA?
About ₹85,387 a month, with basic at 50%, full PF, gratuity in CTC and the new tax regime (FY 2026-27).
Is PF deducted from CTC?
Yes, twice: the employer's 12% is part of CTC, and your own 12% is deducted from your gross salary. Both go into your EPF account.
Is gratuity part of CTC?
Often, at 4.81% of basic. You receive it only when you leave after 5 years of service.
What is the difference between gross salary and CTC?
Gross salary is CTC minus the employer's PF and gratuity. In-hand pay is gross minus your PF, professional tax and income tax.
These results are estimates for planning only, not financial, investment or tax advice. Rates and rules change, and your bank, fund house or employer may calculate slightly differently. Check with them or a qualified adviser before you decide.
Sources
- Income Tax Department: tax rates and slabs
- EPFO: contribution rates and wage ceiling
- Ministry of Labour and Employment: Code on Wages, 2019 (definition of wages)
Last reviewed: 10 October 2026