Salary Calculator

Why is your in-hand salary lower than your CTC?

Your CTC (cost to company) is the full amount your employer spends on you every year — but it's not what lands in your bank account. Two things shrink the gap between CTC and in-hand pay: employer deductions that never reach you as cash, and tax on the portion that does.

First, your employer subtracts its own Provident Fund (PF) contribution and a gratuity provision from your CTC before your salary is even calculated — these are statutory benefits paid on your behalf, not cash you receive monthly. Under the EPF scheme, both you and your employer contribute 12% of your Basic pay (subject to a ₹15,000 wage ceiling unless your employer voluntarily contributes on your full Basic). Of your employer's share, 8.33% goes toward your pension (EPS, capped at ₹1,250/month) and the rest builds your PF corpus.

Second, your remaining salary — called Gross — is taxed. Under the new tax regime (the default for FY 2026-27), you get a ₹75,000 standard deduction and pay tax on a simple slab structure, with a rebate that brings your tax to zero if your taxable income is ₹12,00,000 or below. Under the old regime, you get a smaller standard deduction (₹50,000) but can claim HRA exemption if you pay rent, plus deductions under Section 80C (investments like PPF, ELSS, life insurance, up to ₹1,50,000) and Section 80D (health insurance premiums). Which regime leaves you with more in-hand pay depends entirely on how much you can actually claim under the old regime's deductions — for many salaried employees without significant rent or investments, the new regime works out better.

A third, smaller deduction is professional tax — a small state-levied tax (capped at ₹2,500/year by law) that varies by state. A few states, including Delhi, don't levy it at all.

The number that actually matters for your monthly budget is your in-hand pay: your Gross salary, minus your own PF contribution, minus professional tax, minus whatever income tax you owe. That's the figure this calculator shows you — and because it depends on your Basic percentage, your state, your regime choice, and (for the old regime) your rent and investments, it's worth checking against your actual offer letter rather than a rough rule of thumb.