CTC vs in-hand salary: where the money goes

Rules for FY 2026-27 · Checked 24 October 2026

Short answer

Your in-hand salary is your CTC minus employer PF and gratuity (which you do not get monthly), then minus your own PF, professional tax and income tax. On a ₹12 lakh CTC that leaves about ₹91,400 a month in the new regime.

What makes up a CTC

PartWhat it isIn your monthly pay?
Basic payThe fixed core of your salary, usually 40–50% of CTC. PF and gratuity are worked out on it.Yes
HRAHouse rent allowance. Partly tax-free in the old regime if you pay rent.Yes
Special allowanceWhatever is left of the fixed pay. Fully taxed.Yes
Bonus / variable payDepends on performance, paid once or twice a year.No
Employer PF12% of basic, up to the wage ceiling.No, it goes to your PF
GratuityAbout 4.81% of basic, paid when you leave after 5 years.No
InsuranceGroup health or life cover premiums.No

Monthly in-hand salary by CTC

Assuming basic at 50% of CTC, PF at the ₹25,000 wage ceiling (₹3,000 a month), gratuity in the CTC, ₹2,400 professional tax, no bonus and the new regime for FY 2026-27:

CTC a yearIncome tax a yearIn-hand a month
₹6 lakh₹0₹42,600
₹8 lakh₹0₹58,860
₹10 lakh₹0₹75,130
₹12 lakh₹0₹91,400
₹15 lakh₹86,260₹1,08,600
₹18 lakh₹1,34,310₹1,29,000
₹20 lakh₹1,74,910₹1,41,880
₹25 lakh₹2,93,510₹1,72,660
₹30 lakh₹4,42,060₹2,00,950
₹40 lakh₹7,46,550₹2,56,900
₹50 lakh₹10,51,050₹3,12,860

How the labour codes affect your salary

The labour codes in force since 21 November 2025 say that “wages” must be at least half of your total pay. If allowances are more than 50%, the excess is treated as wages for PF and gratuity.

In practice many employers have raised basic pay to 50% of CTC. That raises PF and gratuity, which are savings for you, and can lower monthly in-hand pay slightly. From 17 September 2026 the EPF wage ceiling also rose to ₹25,000, raising the usual PF deduction from ₹1,800 to ₹3,000 a month.

Work out your own in-hand salary

Salary calculator (CTC to in-hand)

12 lakh
₹
%

Check your offer letter. Under the labour codes, basic and DA are usually at least half of pay.

₹

Paid once or twice a year, so it is left out of the monthly figure.

PF, gratuity and professional tax

Off: PF stops at the ₹25,000 a month wage ceiling, as most employers do. On: 12% of all of your basic.

Most offer letters include it at 4.81% of basic. You get it only after leaving.

2.4 thousand
₹

₹2,400 or ₹2,500 in most states, zero in Delhi and some others.

Old regime extras
₹
₹

PPF, ELSS, insurance. Your PF already counts.

₹

80D health insurance, NPS, home loan interest.

In-hand salary a month₹91,395

Under the new regime, after PF, professional tax and income tax.

  • ₹10,96,740 a year reaches your bank account: 91% of your CTC.
  • Your PF grows by ₹6,000 a month, counting your employer's share.
  • You pay no income tax at this salary in the new regime.
Take-home91%
  • Take-home pay₹10,96,740
  • Income tax₹0
  • PF (yours + employer)₹72,000
  • Gratuity and professional tax₹31,260
Monthly pay slip
Basic
₹50,000
HRA and other allowances
₹44,595
Your PF
− ₹3,000
Professional tax
− ₹200
Income tax (TDS)
₹0
In hand
₹91,395
Where your CTC goes in a year
CTC
₹12,00,000
Employer PF
− ₹36,000
Gratuity
− ₹28,860
Gross salary
₹11,35,140
Your PF
− ₹36,000
Professional tax
− ₹2,400
Income tax
₹0
Take-home for the year
₹10,96,740

Frequently asked questions

Why is my in-hand salary lower than CTC ÷ 12?

Because CTC includes employer PF, gratuity and bonus, which are not paid monthly, and your own PF, professional tax and income tax come out of what is left.

Can I ask for a lower PF to increase in-hand pay?

If your basic is above the wage ceiling, your employer may limit PF to the ceiling. Below the ceiling, PF is compulsory.

What is a good basic pay percentage?

Around 40–50% of CTC is common. A higher basic means more PF and gratuity savings but slightly lower in-hand pay.

Sources: EPFO, Ministry of Labour and Employment, Income Tax Department