How CTC becomes in-hand salary
Your CTC includes money you never receive monthly. Here's how it's taken apart:
Gross salary = CTC − Employer PF − Gratuity
In-hand = Gross − Employee PF − Professional tax − Income tax
In-hand = Gross − Employee PF − Professional tax − Income tax
- Employer PF: 12% of basic, paid into your PF account. It's part of CTC but not paid to you monthly.
- Gratuity: about 4.81% of basic. It's paid only when you leave after 5+ years of service.
- Employee PF: another 12% of basic, deducted from your gross salary. It's your savings, not a cost.
- Professional tax: a state tax of up to ₹2,500 a year. Some states, such as Delhi, don't charge it.
- Income tax (TDS): deducted every month based on your estimated yearly tax. See our income tax calculator for the full old vs new regime comparison.
How to increase your in-hand salary
- Ask whether PF can be capped at ₹1,800 a month instead of 12% of full basic. You get more cash now but save less.
- Compare regimes. The new regime usually wins unless you have big HRA, home loan or 80C claims.
- Ask about tax-free parts of the salary your employer offers, such as employer NPS contributions, which are deductible in both regimes.
Frequently asked questions
Why is my in-hand lower than CTC ÷ 12?
Because employer PF, gratuity, employee PF, professional tax and income tax all come out of CTC before salary reaches you.
Are bonuses included?
If your CTC includes a variable or performance bonus, your monthly pay will be lower than shown, since the bonus is paid separately and may not be guaranteed.
Estimates only. Actual salary depends on your company's pay structure, allowances, state and declarations. Not tax advice.