CTC to In-Hand Salary: How It Is Calculated

From CTC to in-hand in two steps

Gross salary = CTC - employer PF - gratuity
In-hand      = gross - your PF - professional tax - income tax
Per month    = (in-hand - variable pay) / 12

What is inside a CTC

• Basic: the base of most other parts. The calculator starts at 50% of the fixed CTC. The new labour codes count at least half of pay as wages, so many companies now set basic at about 50%. Check your offer letter.
• HRA and special allowance: the rest of the monthly pay. The calculator puts HRA at 40% of basic and the rest in special allowance.
• Employer PF: 12% of basic, put into your PF account. It is yours, but it is not paid to you each month.
• Gratuity: 4.81% of basic a year (15/26 of a month's basic). You get it when you leave, usually after 5 years of service.
• Variable pay or bonus: paid separately, so the calculator leaves it out of the monthly figure.

What is cut from your gross

• Your PF: another 12% of basic. Some companies work it out on a basic of ₹15,000, which is ₹1,800 a month; the calculator has an option for that, and one for no PF.
• Professional tax: set by the state. The calculator starts at ₹2,400 a year. Some states do not charge it, so type the amount for your state.
• Income tax: worked out on the FY 2026-27 slabs, for individuals under 60.

Worked example: ₹10 lakh CTC

Basic 50%, PF 12% of full basic, employer PF and gratuity inside the CTC, professional tax ₹2,400, no variable pay, new regime.

About 85% of the CTC reaches the bank. The ₹1,20,000 of PF (yours and the employer's) and the ₹24,050 of gratuity are still your money; you just do not get them each month.

Income tax under the new regime

The new regime is the default in the calculator. It takes off a ₹75,000 standard deduction and then applies these slabs to the taxable income:

A rebate makes the tax zero when the taxable income is ₹12 lakh or less, so a gross salary up to ₹12.75 lakh pays no tax. Just above ₹12 lakh, marginal relief means the tax cannot be more than the income above ₹12 lakh: at ₹12.1 lakh taxable, the tax is ₹10,000 plus 4% cess, ₹10,400. On top of the tax there is a 4% health and education cess, and surcharge on very high incomes. Professional tax is not deducted in the new regime.

Worked example: ₹15 lakh CTC

Same structure as above. The gross salary is ₹13,73,925 and your PF is ₹90,000. The taxable income is 13,73,925 - 75,000 = ₹12,98,925. The slab tax is ₹20,000 (4 to 8 lakh) + ₹40,000 (8 to 12 lakh) + about ₹14,839 (15% of the ₹98,925 above 12 lakh) = ₹74,839. With 4% cess the total is ₹77,832. In hand: about ₹1,00,308 a month.

The old regime

The old regime has slabs of 0% up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above, with no tax when the taxable income is ₹5 lakh or less. It allows more deductions: a ₹50,000 standard deduction, professional tax, HRA exemption on the rent you pay, 80C up to ₹1.5 lakh (your PF counts towards it) and others you enter, such as 80D health insurance, home loan interest and NPS 80CCD(1B).

Even with high rent and a full 80C, the new regime leaves a little more in this example. The calculator works out both regimes every time and tells you which saves more, so try it with your own rent and investments.

Do not add your PF to the 80C box yourself. The calculator already counts it towards the ₹1.5 lakh limit, and adding it again makes the old regime look better than it is.

Why your payslip may differ

• Most differences come from the basic %, the PF option and whether gratuity is inside the CTC. Match these with your offer letter.
• Allowances such as food coupons, LTA, phone or car lease and employer NPS are not worked out separately.
• Income from interest, rent or capital gains is not included.
• Your employer cuts tax (TDS) based on what you declare, so some months can differ from the average.
• Tax slabs and rules are set by the Budget and the Income Tax Department. The calculator follows FY 2026-27 as its code states; the official rules decide.

Common questions

What is the in-hand salary for 12 lakh CTC? About ₹85,395 a month under the new regime with the default structure, with no income tax.

Why is in-hand lower than CTC / 12? Because employer PF and gratuity are inside the CTC, and your own PF and professional tax are cut from the gross.