From CTC to In-Hand — How Your Salary Actually Shrinks
The single most misread number on an Indian job offer is the CTC. A ₹12 lakh CTC does not mean ₹1 lakh a month in your account — it usually means about ₹85,000. The gap is not a scam; it is the layered structure of Indian payroll, where employer contributions are bundled into the headline "cost to company" and several deductions come off before the money reaches your bank. This calculator unwinds that structure the way a real payslip does: it splits your CTC into basic, HRA and allowances, removes the employer's EPF and gratuity, applies the correct income tax under both the new and old regimes, and shows you the regime that leaves more in your pocket.
The Three Salary Numbers
| Term | What it means |
|---|---|
| CTC | Total cost to company — gross salary + employer EPF + gratuity + any insurance/perks |
| Gross salary | CTC minus employer-side contributions; the figure before your own deductions |
| In-hand (net) | Gross minus employee EPF, professional tax and income-tax TDS — what reaches your bank |
How In-Hand Salary Is Calculated
The calculator follows the exact sequence a payroll system uses:
- Basic salary = your chosen percentage of CTC (40–55%). Basic is the engine — it drives PF, gratuity and HRA.
- Employer EPF = 12% of basic (or ₹1,800/month if you cap at the ₹15,000 statutory wage). This is inside CTC but goes to your PF account, not your bank.
- Gratuity provision = 4.81% of basic, set aside by the employer as part of CTC.
- Gross salary = CTC − employer EPF − gratuity.
- Employee EPF = 12% of basic, deducted from gross.
- Professional tax = your state's levy, up to ₹2,500/year.
- Income tax (TDS) = computed on taxable income under each regime, after the standard deduction and any eligible exemptions.
- In-hand = Gross − employee EPF − professional tax − income tax, divided by 12 for the monthly figure.
New Regime Tax Slabs (FY 2025-26, Budget 2025)
The new regime is the default from FY 2025-26 and, after the Budget 2025 overhaul, is the better choice for most salaried people. The standard deduction is ₹75,000, and a Section 87A rebate makes tax zero up to ₹12 lakh of taxable income.
| Taxable income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Because of the 87A rebate, a salaried person with up to about ₹12.75 lakh gross (₹12 lakh after the ₹75,000 standard deduction) pays no income tax at all. A 4% Health & Education cess applies on top of the computed tax once you cross the rebate ceiling.
Old Regime Tax Slabs
The old regime keeps lower exemption thresholds but lets you claim HRA, the full ₹1.5 lakh under 80C, home-loan interest (₹2 lakh under Section 24b), 80D health insurance and more. Its 87A rebate covers only up to ₹5 lakh of taxable income, and the standard deduction is ₹50,000.
| Taxable income | Rate (below 60) |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Senior citizens (60–80) get a ₹3 lakh basic exemption and super seniors (80+) get ₹5 lakh under the old regime — the calculator applies this automatically from your age group.
New vs Old — Which Wins?
The break-even rule of thumb: the old regime only beats the new one if your total deductions (HRA exemption + 80C + 80D + home-loan interest + NPS) exceed roughly ₹4–4.5 lakh. Below that, the new regime's wider zero-tax band and bigger standard deduction win. The two cases where the old regime still pays off:
- High metro rent — a large HRA exemption can swing tens of thousands.
- A home loan — ₹2 lakh of interest under Section 24(b) is a big old-regime-only deduction.
Tick "I claim old-regime deductions" above to enter rent, 80C and other deductions, and the calculator will mark which regime leaves you with more in-hand pay.
Why a Higher Basic Cuts Your Monthly Take-Home
It feels backwards, but a higher basic salary reduces your monthly in-hand — because both your 12% EPF and the employer's 12% scale with basic. That money is not lost; it compounds tax-free in your EPF at around 8.25% and is a forced retirement saving. So a lower in-hand from a higher basic is often a better deal than it looks. If you want maximum cash now, a structure with lower basic and more special allowance raises take-home but shrinks your PF corpus.
Professional Tax by State
Professional tax is a state subject, capped at ₹2,500/year nationally. Karnataka, Maharashtra, West Bengal, Tamil Nadu, Telangana and Andhra Pradesh charge roughly ₹200/month. Delhi, Haryana, Uttar Pradesh, Uttarakhand and most union territories levy nothing — set the field to ₹0 if you work there.
Common Mistakes Reading an Offer
- Treating CTC ÷ 12 as monthly pay. It overstates take-home by 15–30%.
- Ignoring variable pay. A "₹15 lakh CTC" with ₹3 lakh variable is really a ₹12 lakh fixed offer; the variable is performance-linked and often partly paid.
- Forgetting the regime choice. Picking the wrong regime can cost ₹20,000–₹50,000 a year. Compare both before declaring to payroll.
- Over-weighting a high basic. Great for PF, worse for monthly cash — decide based on your cash-flow needs.
- Missing professional tax / insurance lines. Small but real monthly leaks the headline hides.
Frequently Asked Questions
What is the in-hand salary for a ₹12 LPA CTC?
With 50% basic on the new regime, a ₹12 lakh CTC gives roughly ₹85,000 per month in-hand — income tax is zero under the 87A rebate, and the gap from ₹1 lakh is mostly EPF (yours + employer's) and gratuity. Use the calculator for your exact basic percentage and state.
What is the in-hand for ₹7 LPA or ₹10 LPA?
A ₹7 lakh CTC lands near ₹49,700/month and a ₹10 lakh CTC near ₹71,100/month on the new regime (50% basic), both effectively tax-free after the rebate. Enter your figure above for a precise breakup.
Does in-hand salary include the employer's PF?
No. The employer's 12% EPF is part of your CTC and goes into your PF account, not your monthly bank credit. In-hand counts only the cash that reaches you after your own deductions.
Is the new regime compulsory in 2026?
The new regime is the default, but you can still opt for the old regime when filing or declaring to your employer. Salaried taxpayers can switch between regimes each year; those with business income face stricter switching rules.
How accurate is this calculator?
It models the standard CTC structure (basic, HRA, employer EPF, gratuity, special allowance), the Budget 2025 new-regime and old-regime slabs, the 87A rebate, cess and professional tax. Real payslips vary with employer-specific components (NPS, LTA, food cards, insurance, variable pay), so treat the output as a close estimate, not a payslip.
Does it handle surcharge for high salaries?
Yes — for taxable income above ₹50 lakh the calculator applies the surcharge (10% / 15% / 25%), with the new regime's 25% cap, before adding the 4% cess. Marginal relief near each threshold is not modelled, so very-close-to-threshold figures may differ slightly.