CTC is not what you get every month
Your CTC (cost to company) is everything your employer spends on you in a year. Part of it never reaches your bank account each month: your employer's PF contribution goes to your PF account, gratuity is paid only when you leave after five years, and variable pay or bonus usually comes once a year. From the monthly part, your employer then takes out your own PF, professional tax and income tax (TDS). What's left is your in-hand salary.
How in-hand salary is worked out
- Fixed pay = CTC − employer PF − gratuity − variable pay. This is basic + HRA + special allowance.
- Employee PF: 12% of basic + DA, or 12% of ₹15,000 (₹1,800 a month) if your employer caps it.
- Professional tax: set by your state, up to ₹2,500 a year.
- Income tax on your salary under the regime you choose, spread over 12 months.
- In-hand a month = (fixed pay − employee PF − professional tax − income tax) ÷ 12.
Special allowance is usually the balancing figure: whatever is left of the CTC after the other parts. Gratuity in a CTC is typically 4.81% of basic (15 days' basic for each year, at 26 working days a month).
Worked example: ₹12 lakh CTC in Bengaluru
Basic ₹4,80,000 a year, HRA ₹2,40,000, PF at 12% of basic, gratuity in the CTC, no variable pay, new tax regime.
| Item | Yearly | Monthly |
|---|---|---|
| CTC | ₹12,00,000 | ₹1,00,000 |
| − Employer PF and gratuity | ₹80,677 | ₹6,723 |
| Fixed pay | ₹11,19,323 | ₹93,277 |
| − Employee PF | ₹57,600 | ₹4,800 |
| − Professional tax (Karnataka) | ₹2,500 | ₹208 |
| − Income tax (new regime) | ₹0 | ₹0 |
| In-hand | ₹10,59,223 | ₹88,269 |
Taxable income in the new regime is ₹10,44,323 after the ₹75,000 standard deduction, which is under ₹12 lakh, so the section 87A rebate cancels the tax. In the old regime the same salary pays ₹1,19,878 in tax (with only PF under 80C), so the new regime leaves about ₹10,000 a month more.
Old or new regime?
The new regime has lower rates and no tax up to ₹12 lakh of taxable income, but almost no deductions. The old regime lets you subtract HRA for the rent you pay, 80C investments (your PF counts) up to ₹1.5 lakh, health insurance under 80D and professional tax. It pays off only when those deductions are large — usually high rent in a metro plus full 80C and 80D. The calculator works out both and shows which leaves more in hand. For more deductions (home loan interest, NPS) use the income tax calculator, and the HRA calculator for the HRA rule on its own.
Professional tax: which states are covered
Professional tax is charged by states, on your gross monthly salary. The calculator uses FY 2026-27 slabs for these states:
- Maharashtra: ₹200 a month above ₹10,000 (₹300 in February), ₹2,500 a year. Women earning up to ₹25,000 a month pay nothing; the calculator uses the general slabs.
- Karnataka: ₹200 a month from ₹25,000 (₹300 in February), ₹2,500 a year.
- Tamil Nadu: Greater Chennai Corporation's half-yearly slabs, up to ₹1,250 twice a year. Other local bodies may charge a little differently.
- West Bengal: the slabs in force from October 2026, up to ₹208 a month above ₹1 lakh.
- Gujarat: ₹200 a month above ₹12,000.
- Telangana and Andhra Pradesh: ₹150 a month from ₹15,001, ₹200 above ₹20,000.
- No professional tax: Delhi, Uttar Pradesh, Haryana, Rajasthan and several others.
For any other state that charges it, pick "Other state": the calculator assumes the ₹2,500 maximum.
What the calculator assumes
- Basic includes dearness allowance (DA), and variable pay is paid in full.
- Tax on variable pay is shown separately: it's the extra tax the bonus adds, usually taken in the month it's paid.
- You're below 60 with no other income. Employer contributions like meal cards, NPS or insurance premiums are not modelled; if they're in your CTC, they reduce the special allowance.
Results are estimates for illustration only, not financial advice. Banks and schemes may round, apply TDS or use slightly different day counts — confirm figures with your bank or employer. Written by the Welthr team; last reviewed on .