The number in your offer letter (CTC) and the number that hits your bank account are rarely the same — and the gap surprises almost everyone on their first payslip. CTC includes costs your employer pays on your behalf that never reach your account, plus deductions taken before payday. This guide breaks CTC down to in-hand salary with a worked example, and the free salary calculator does it instantly.
What CTC really means
CTC (Cost to Company) is the total annual amount your employer spends on you — not what you take home. It bundles your salary with the employer's PF contribution, gratuity, insurance premiums and sometimes perks. Those employer-side costs inflate the headline figure without ever landing in your account.
CTC → gross → net: three different numbers
- CTC — everything the company spends, including its own contributions.
- Gross salary — CTC minus the employer's contributions (its PF share, gratuity). This is your salary before your own deductions.
- Net (in-hand) salary — gross minus your deductions (your PF, professional tax, income tax). This is what you actually receive.
The deductions explained
- Provident Fund (PF) — typically 12% of basic salary, deducted from you (the employer adds a matching share on top of CTC). It's forced savings, not lost money — it's yours later.
- Professional tax — a small state-level tax, often around ₹200 a month where it applies.
- Income tax (TDS) — deducted monthly based on your slab and the regime (old vs new) you choose.
Worked example
A ₹12,00,000 CTC, illustrative:
| CTC (annual) | ₹12,00,000 |
| Less: employer PF & gratuity | − ₹72,000 |
| Gross salary | ₹11,28,000 |
| Less: employee PF | − ₹43,200 |
| Less: professional tax | − ₹2,400 |
| Less: income tax (TDS) | − ₹70,000 |
| Net annual (in-hand) | ≈ ₹10,12,400 |
| Monthly in-hand | ≈ ₹84,367 |
Exact figures depend on your salary structure and tax regime — change the inputs in the calculator to match your own offer.
How to raise your take-home
- Compare tax regimes — the new regime's lower rates often beat the old regime once you drop most deductions.
- Use tax-efficient allowances — HRA, LTA and standard deduction reduce taxable income where eligible.
- Look past the headline CTC — two offers with the same CTC can have very different in-hand pay depending on structure.
FAQ
Why is my in-hand so much lower than CTC? CTC includes employer contributions and perks that never reach you, plus PF and tax deducted before payday.
Is PF lost money? No — it's your retirement savings; you get it back with interest.
Does a higher CTC always mean higher take-home? Not necessarily — salary structure and tax choices matter as much as the headline number.
Is my data private? Yes — the calculator runs in your browser and stores nothing.