What is CTC in Salary?
CTC stands for Cost to Company. It is the total annual amount an employer spends on hiring you, including your basic salary, allowances, and employer-side contributions like PF and gratuity. CTC is the number written in your offer letter -- but it is never the amount that hits your bank account.
Your actual in-hand salary (take-home) is lower because it excludes employer PF contributions and gratuity, and further reduces by employee PF, professional tax, and income tax. For most salaried employees in India, the in-hand salary is 70% to 85% of CTC depending on their CTC level and tax situation.
What is the Difference Between CTC, Gross Salary, and In-Hand Salary?
| Term | What it includes | What you actually get |
|---|---|---|
| CTC | Basic + HRA + allowances + employer PF + gratuity + any other benefits | No -- this is the employer's cost |
| Gross Salary | Basic + HRA + all allowances (excludes employer PF and gratuity) | No -- deductions still apply |
| In-Hand / Take-Home | Gross salary minus employee PF, professional tax, and income tax | Yes -- this is what gets credited |
How CTC to In-Hand Calculation Works
Your CTC (Cost to Company) is the total amount your employer spends on you annually. Your in-hand salary is what actually gets credited to your bank account every month. The gap between the two is usually 15% to 30% depending on your CTC and tax regime.
New Regime vs Old Regime: Which One to Pick
| Situation | Better Regime |
|---|---|
| Salary below Rs. 12.75 LPA, no investments | New Regime (zero tax) |
| Salary Rs. 12.75L to Rs. 15L, minimal deductions | New Regime |
| Salary Rs. 15L+ with 80C maxed, HRA claimed, home loan | Old Regime likely better |
| Salary above Rs. 25L with full deductions | Compare both |
Quick Reference: In-Hand for Common CTC Levels
| Annual CTC | Monthly In-Hand (New Regime) | Annual Tax |
|---|---|---|
| Rs. 6 LPA | ~Rs. 47,800 | Rs. 0 |
| Rs. 8 LPA | ~Rs. 61,500 | Rs. 0 |
| Rs. 10 LPA | ~Rs. 71,100 | Rs. 0 |
| Rs. 12 LPA | ~Rs. 85,400 | Rs. 0 |
| Rs. 15 LPA | ~Rs. 99,200 | ~Rs. 22,100 |
| Rs. 20 LPA | ~Rs. 1,24,500 | ~Rs. 57,200 |
| Rs. 25 LPA | ~Rs. 1,50,000 | ~Rs. 1,02,500 |
Standard PF structure (Rs. 1,800/month), 40% basic, metro city, new regime. Use the calculator above for exact figures.
Frequently Asked Questions
Yes. Under the new regime, the Section 87A rebate wipes out tax on taxable income up to Rs. 12 lakh. After the Rs. 75,000 standard deduction, a gross salary of Rs. 12.75 lakh gives exactly Rs. 12 lakh taxable income -- resulting in zero tax.
Because CTC includes employer contributions that never hit your account -- employer PF (up to Rs. 21,600/year) and gratuity (4.81% of basic). On top of that, employee PF, professional tax, and income tax all reduce your take-home. At higher salaries, the tax component alone can reduce take-home to 65% of CTC.
For most people earning below Rs. 15 LPA without significant deductions, the new regime saves more due to lower slab rates. The old regime works better when your total deductions (80C + 80D + HRA + home loan) exceed roughly Rs. 3.75 lakh at the Rs. 15 LPA bracket. Use the comparison in our calculator to check your exact situation.
Professional tax is a state-level tax deducted by employers. The maximum is Rs. 2,400/year (Rs. 200/month). Not all states levy it -- Karnataka, Maharashtra, Andhra Pradesh, Telangana, and West Bengal are the main ones. Our calculator applies Rs. 2,400 as the standard amount.
Most Indian companies structure basic at 40% to 50% of CTC. A higher basic means higher PF and higher HRA exemption potential under old regime. A lower basic means higher special allowance which is fully taxable. Our calculator defaults to 40% basic, which is the most common structure.
On a Rs. 10 LPA CTC with standard PF (Rs. 1,800/month cap), 40% basic, metro city, and new tax regime for FY 2026-27, your monthly in-hand salary is approximately Rs. 71,100. Since your taxable income after the Rs. 75,000 standard deduction falls under Rs. 12 lakh, you pay zero income tax under the new regime. Use the calculator above with your exact salary structure for a precise figure.
On a Rs. 15 LPA CTC with standard structure, new tax regime, metro city, your monthly in-hand is approximately Rs. 99,200. You will pay around Rs. 22,100 in annual income tax at this CTC level since your taxable income exceeds the Rs. 12 lakh threshold where the 87A rebate applies. The old regime may save slightly more if you have significant 80C and HRA deductions.
If your basic salary exceeds Rs. 15,000 per month, many large companies cap their PF contribution at the statutory minimum -- 12% of Rs. 15,000 = Rs. 1,800/month. This means both you and your employer contribute Rs. 1,800 each month regardless of your actual basic. Some companies contribute 12% of your full basic (called full PF), which lowers your take-home further but builds more retirement corpus. Our calculator defaults to the Rs. 1,800 cap since this is the most common structure at companies like TCS, Infosys, Wipro, and most large employers.