CTC vs in-hand — where your salary actually goes
Your offer says ₹15 lakh. Your bank sees about ₹1.1 lakh a month. Here’s every rupee in between, and what you can change.
CTC (cost to company) is what your employer spends on you in a year. It isn’t what you take home. Some of it goes to your future (PF, gratuity), some to the government (tax), and some arrives only once a year (bonus).
What’s inside a CTC
Paid to you every month (gross salary)
- Basic pay: the anchor for PF, gratuity and HRA.
- HRA: house rent allowance. Partly tax-free in the old regime if you pay rent.
- Special allowance: the balancing figure that makes the numbers add up.
Paid once a year
- Variable pay / performance bonus: often 10–20% of CTC, and not guaranteed.
Never reaches your bank
- Employer’s PF: 12% of basic. Most of it goes to your EPF account; 8.33% (of basic up to ₹25,000) goes to the EPS pension fund instead. It’s your money, just locked up for retirement.
- Gratuity: 4.81% of basic is often counted in CTC, but it’s paid only when you leave after five years of service (one year on a fixed-term contract).
- Insurance premiums, employer NPS and similar benefits.
The 50% rule changed the maths
Under the new labour codes, in force since November 2025, at least half of your pay must count as “wages”. In practice, basic is moving to about 50% of CTC at most companies. A higher basic means:
- more PF (if your employer computes it on full basic) and a bigger gratuity, so more saved for later, but
- slightly lower monthly in-hand pay.
Many employers still compute PF only on the first ₹25,000 of monthly basic (the wage ceiling since 17 September 2026), capping it at ₹3,000 a month from each side. At ₹15 lakh CTC, that one choice changes in-hand pay by about ₹8,000 a month. Check which one your offer uses.
What comes out of every payslip
- Your PF: 12% of basic (or ₹3,000 if capped).
- Professional tax: a state tax of up to ₹2,500 a year. Maharashtra, Karnataka, West Bengal and others charge it; Delhi, Haryana and UP don’t.
- TDS (income tax): your employer estimates your yearly tax and deducts it evenly each month.
A ₹15 lakh CTC, new regime
With basic at 50%, PF capped and gratuity in CTC:
| Per year | |
|---|---|
| CTC | ₹15,00,000 |
| Employer PF | − ₹36,000 |
| Gratuity | − ₹36,075 |
| Gross salary | ₹14,27,925 |
| Your PF | − ₹36,000 |
| Professional tax | − ₹2,400 |
| Income tax | − ₹86,256 |
| In your bank | ≈ ₹13,03,000 (₹1,08,600 a month) |
That’s about 87% of CTC. With PF on full basic, in-hand drops to about ₹1 lakh a month, but about ₹1.08 lakh more a year goes into your PF instead.
Questions to ask HR before you sign
- What share of CTC is fixed, and how is variable pay decided?
- Is PF on full basic, or capped at ₹25,000?
- Is gratuity counted inside the CTC?
- Can part of the CTC go to employer NPS? Up to 14% of basic is tax-free in the new regime (10% in the old).
Put your own offer into the in-hand salary calculator. It shows this breakdown live, including your monthly payslip.