Take-Home Salary Calculator â How CTC Becomes In-Hand Pay (Payslip Breakdown)
Last verified: April 2026, against EPFO contribution rules, Payment of Gratuity Act, state professional tax slabs, and FY 2025-26 income-tax provisions.
The number on your offer letter and the number that hits your bank account on the 30th are rarely the same. A â¹15,00,000 CTC at a typical Indian company shrinks to roughly â¹95,000-1,05,000 monthly take-home â a 21-28% gap caused by EPF contributions, gratuity, professional tax, group insurance, and TDS on income tax. This guide walks through each line on a typical Indian payslip so you can decode any offer letter in five minutes.
The CTC ladder â six layers from offer letter to bank deposit
Every Indian salary structure has six layers, applied in order:
- CTC (Cost to Company) â what HR quotes
- Minus employer-side benefits (employer EPF, gratuity, group insurance, group medical) â Gross Salary
- Minus employee EPF, professional tax â Taxable Salary
- Minus exemptions (standard deduction, HRA exemption, LTA used) â Net Taxable Income (subject to slabs)
- Minus TDS (income tax + cess) â Net Pay (in-hand)
- Bank credit on payday
Most candidates evaluate offers at layer 1 (CTC) and budget at layer 6 (in-hand). Negotiate at layer 6 â that’s the number you actually live on.
Worked example â â¹15,00,000 CTC at a typical IT services firm
Standard structure: 40% basic, 50% HRA on basic (metro), the rest in special allowance, plus 12% employer EPF and statutory gratuity. Both regimes shown.
| Component | Annual amount | Notes |
|---|---|---|
| Basic | â¹6,00,000 | 40% of CTC |
| HRA | â¹3,00,000 | 50% of basic (metro) |
| Special allowance | â¹4,72,000 | Balancing figure |
| LTA | â¹50,000 | Tax-free if availed with travel proofs |
| Gross Salary | â¹14,22,000 | |
| Employer EPF (12% of basic) | â¹72,000 | Goes into your EPF account |
| Gratuity provision (4.81% of basic) | â¹28,860 | Vests after 5 years |
| Group medical/term cover | ~â¹15,000 | Employer-paid premium |
| Total CTC | â¹15,37,860 â â¹15 L |
Now subtracting employee-side deductions:
| Deduction | Annual | Monthly |
|---|---|---|
| Employee EPF (12% of basic) | â¹72,000 | â¹6,000 |
| Professional tax (Karnataka/Maharashtra) | â¹2,500 | â¹200 |
| Group health employee share (if any) | â¹6,000 | â¹500 |
| Pre-tax monthly outflow | ~â¹80,500 | ~â¹6,700 |
Tax (TDS) â both regimes
New regime: Gross taxable = Salary â¹14.22 L â â¹75K standard deduction = â¹13.47 L. Tax slab-wise = â¹20K (5% Ã â¹4 L) + â¹40K (10% Ã â¹4 L) + â¹22,050 (15% Ã â¹1.47 L) = â¹82,050 + 4% cess = â¹85,332 annual / â¹7,111 monthly TDS.
Old regime (with â¹3 L exemptions: HRA fully claimed + â¹50K 80C balance + â¹25K 80D + standard deduction â¹50K): Net taxable â â¹10.7 L. Tax = â¹12,500 + â¹1 L + 30% Ã â¹70K = â¹1,33,500 + cess = â¹1,38,840 annual / â¹11,570 monthly TDS.
Final in-hand monthly
New regime: Gross monthly â¹1,18,500 â pre-tax deductions â¹6,700 â TDS â¹7,111 = ~â¹1,04,700 in-hand.
Old regime: Gross monthly â¹1,18,500 â pre-tax deductions â¹6,700 â TDS â¹11,570 = ~â¹1,00,200 in-hand.
For this person, the new regime delivers â¹4,500 more per month in hand â exactly the math we showed in the tax regime comparison.
The components decoded
Basic salary
The “anchor” of your salary structure. EPF, gratuity, leave encashment, and the HRA exemption ceiling all derive from basic. Higher basic = higher retirement corpus + better tax position (more HRA exemption) but lower take-home today.
Most companies set basic at 35-50% of CTC. Lower basic (~30%) used to be common at startups to maximise take-home; the 2019 Wage Code mandates basic at 50%+ of CTC, though enforcement has been deferred. Some companies are gradually rebalancing.
HRA (House Rent Allowance)
Tax-exempt under Section 10(13A) in the old regime, fully taxable in new regime. Maximum exemption = lowest of three formulas (see our HRA rules guide). HRA is not paid only if you actually rent; it’s an allowance whose exemption requires rent â but if you don’t rent, the entire HRA is just taxable salary.
Special allowance / Flexible benefit
The catch-all balancing figure. Fully taxable. In some companies this is a “FlexiPay” or “FBP” pool you can split into LTA, food coupons (Sodexo), telephone, books-and-periodicals, etc.
LTA (Leave Travel Allowance)
Tax-exempt only against actual domestic travel by air/rail/road for self + family. Limited to economy airfare on shortest route. Allowed twice in a 4-year block (2026-2029 is the current block). Foreign travel doesn’t qualify.
EPF (Employees’ Provident Fund)
12% of basic from you, 12% from employer (3.67% of which actually goes to your EPF; 8.33% goes to EPS pension). Earns interest at 8.25% (FY 2024-25). Tax-free if held 5+ years. Withdrawable on job change after 2 months unemployed (with documentation), or transferable.
Your contribution counts under Section 80C (old regime); employer contribution doesn’t count under 80C but is exempt up to certain limits. Interest on employee contributions above â¹2.5 L/year is taxable from FY 2021-22 onwards.
Gratuity
Provisioned at 4.81% of basic each month, but you only receive it on (a) completing 5 years of continuous service, or (b) leaving the company after 5 years, or (c) death/disability. Tax-free up to â¹20 L lifetime under Payment of Gratuity Act for non-government employees.
Professional Tax
State-level tax. Maharashtra: â¹200/month (â¹2,500/year). Karnataka: â¹200/month (â¹2,400/year). Tamil Nadu: â¹208/month max. Delhi: nil. Goes straight off your gross â not optional.
Standard deduction
â¹50,000 in old regime, â¹75,000 in new regime (FY 2025-26). Auto-applied; no proof needed.
TDS (Tax Deducted at Source)
Your employer estimates your annual tax based on declared regime + investments + HRA + 80C, divides by 12, deducts each month. If you over-declare and don’t actually invest, the year-end true-up creates a “December salary shock” when more TDS is suddenly cut.
Where the gap goes â visualizing your CTC
| Bucket | % of â¹15 L CTC |
|---|---|
| Cash in your bank (in-hand) | ~80% (new regime) |
| Locked into EPF (employer + employee) | ~9.4% |
| Gratuity provision | ~1.9% |
| Income tax + cess | ~5.7% |
| Group insurance + professional tax | ~1.3% |
| HRA “wasted” (claimable but unclaimed) | varies |
The 9-12% locked into EPF + gratuity is real money â it just lands in your retirement corpus rather than your bank account. Many people forget this when comparing offers.
Three structural choices that change your in-hand
- Higher basic vs lower basic. Higher basic = more HRA exemption ceiling and more EPF, but ~â¹6K-12K less in monthly take-home for a â¹15-25 L CTC.
- FBP customisation. Earmarking part of your special allowance as food coupons (â¹26,400/year tax-free), telephone, internet, or books-and-periodicals can save â¹3,000-8,000/year in tax under the old regime. Under the new regime, these are taxable.
- NPS via employer. Asking your employer to route 10% of basic into NPS Tier 1 under 80CCD(2) gives you the deduction in both regimes â one of the few new-regime deductions still available. See our NPS guide.
Joining bonus, ESOP, RSU â the hidden tax surprises
Joining bonus: Taxable in the year received. Many employees don’t budget for this and end up with surprise tax shortfalls when the December true-up hits.
ESOPs: Taxed twice â at exercise (perquisite tax on FMV minus exercise price, slab rate) and at sale (capital gains, see our capital gains guide).
RSUs: Taxed at vesting (FMV taxed as salary, TDS deducted), and at sale (capital gains on appreciation post-vest).
Listed-equity ESOPs/RSUs are easier â same as buying stock. Unlisted (private company) shares trigger STCG/LTCG at slab rate or 12.5% based on holding period; foreign-parent companies (Microsoft, Google, etc.) bring FEMA reporting + Schedule FA disclosures into your ITR.
Linked deep-dives
- Old vs New Tax Regime FY 2025-26
- HRA Calculator & rules
- PPF vs EPF vs VPF â what to do with your provident fund
- NPS Tier 1 vs Tier 2 â extra â¹50K deduction
- Income Tax Calculator
FAQs
Why is my in-hand salary so much less than the CTC?
The 20-28% gap goes to: employer EPF (~5% of CTC, locked in retirement), gratuity provision (~2%), employee EPF (~5% of CTC, your retirement), TDS (5-15% depending on regime/income), professional tax (â¹200/month), and group insurance premiums. Plus HRA that you can’t claim because you live with parents or own your home.
Is the joining bonus part of CTC?
It depends on the offer letter wording. Many companies show joining bonus separately as a “one-time payment” and exclude it from CTC; some include it for that year only. Check the line-by-line annexure of your offer.
Can I opt out of EPF?
If your basic + DA exceeds â¹15,000/month, EPF is voluntary in principle â but most large employers default-enrol everyone. To opt out, sign a Form 11 declaration at joining; you cannot opt out mid-tenure. Self-employed and freelancers don’t have EPF at all.
What’s the difference between gross and net salary?
Gross = CTC minus employer-side benefits (employer EPF, gratuity, insurance). Net (in-hand) = Gross minus employee EPF, professional tax, TDS, and any voluntary deductions (VPF, NPS, food coupons).
Why does TDS sometimes spike in February-March?
Employer estimates your annual tax based on regime and investment declarations made in April. If you don’t actually make those declared investments by January (proof submission), the estimated tax is recalculated higher, and the shortfall is recovered from February-March salaries.
What if I switch jobs mid-year?
Your new employer can take account of TDS already deducted by the previous employer (Form 12B). If you don’t share Form 12B, the new employer treats your year as starting fresh â leading to under-deduction and a surprise tax bill at filing.
Sources & references
- EPFO â contribution and interest rates
- Payment of Gratuity Act, 1972 (latest amendments)
- State Professional Tax notifications (Karnataka, Maharashtra, Tamil Nadu)
- CBDT â TDS on Salary (Section 192) and Form 16 specification
Last verified: April 2026. EPF interest rates and gratuity ceiling are reviewed annually â we update after each EPFO/Budget announcement.
