How to Calculate In-Hand Salary from CTC in India (2026)

You cleared the interview, the offer letter says ₹12,00,000 CTC, and you are already planning your budget around ₹1 lakh a month. Then the first salary credits — and it is closer to ₹78,000. Where did the rest go? This guide breaks down exactly how CTC becomes in-hand salary in India, so there are no surprises on payday.

CTC vs Gross vs In-Hand: the three numbers that matter

CTC (Cost to Company) is the total amount your employer spends on you in a year. It includes several things you never actually receive in your bank account.

• CTC — everything the company spends: your salary plus employer PF, gratuity, and sometimes insurance premiums.
• Gross salary — CTC minus the employer-side contributions (employer PF + gratuity). This is your salary before deductions.
• In-hand (net) salary — gross minus employee PF, professional tax, and income tax (TDS). This is what actually hits your account.

The gap between CTC and in-hand is typically 20–30% for most Indian salaries. Understanding each deduction lets you predict your take-home before you accept an offer.

The deductions, one by one

1. Employer PF (12% of basic)

Your employer contributes 12% of your basic salary to your EPF account. This is part of CTC but never appears in your payslip as income — it goes straight to retirement savings. If your basic is ₹40,000/month, that is ₹4,800/month of CTC you never see as cash.

2. Gratuity (4.81% of basic)

Companies set aside roughly 4.81% of basic as gratuity, payable only after you complete 5 years. It inflates your CTC today but you receive nothing until you qualify.

3. Employee PF (12% of basic)

You also contribute 12% of basic. This is deducted from your gross, lowering in-hand — but it is your money, growing tax-free in EPF.

4. Professional tax

A small state-level tax. Karnataka (Bangalore), Maharashtra (Mumbai, Pune), Tamil Nadu (Chennai), West Bengal and Telangana (Hyderabad) charge around ₹200/month. Delhi, Gujarat, Rajasthan and most of north India charge nothing.

5. Income tax (TDS)

Deducted monthly based on your chosen tax regime. Under the New Regime (FY 2025-26), income up to ₹7 lakh is effectively tax-free thanks to the rebate, so many freshers pay zero TDS.

Worked example: ₹12 LPA in Bangalore

Assume a typical structure where basic is 40% of CTC:

1. 1CTC = ₹12,00,000/year → ₹1,00,000/month
2. 2Basic (40%) = ₹40,000/month
3. 3Less employer PF (₹4,800) and gratuity (₹1,924) → Gross ≈ ₹93,276/month
4. 4Less employee PF (₹4,800) and professional tax (₹200)
5. 5Less TDS (New Regime, ≈ ₹2,500/month after rebate and standard deduction)
6. 6In-hand ≈ ₹85,700/month

Change the basic percentage or the city and the number moves. A higher basic means more PF deducted now (lower in-hand) but a bigger retirement corpus. Rather than do this by hand, run your exact numbers through our free calculator.

How to increase your in-hand salary

• Negotiate the structure, not just the number — ask for a lower basic % if you want more cash now (trade-off: less PF).
• Pick the right tax regime — the wrong choice can cost ₹10,000–₹50,000/year. Compare both for your numbers.
• Claim HRA if you pay rent — it can meaningfully cut taxable income under the Old Regime.
• Aim higher with a stronger resume — the biggest lever on take-home is the offer itself.

A resume that clears ATS filters and lands more interviews is the highest-leverage way to raise your salary. Build one free with ResumeWorlds and tailor it to every job description in one click.