CTC to In-Hand Salary: Every Deduction Explained
Step-by-step breakdown of how CTC becomes in-hand salary. Employer PF, gratuity, gross salary, employee PF, professional tax, and income tax TDS — with worked examples for ₹8L to ₹30L CTC.
By RupeesCalc Editorial Team··8 min read
The Two-Step Conversion
CTC to in-hand involves two separate calculations most people confuse:
- CTC → Gross Salary: Remove what the employer pays but you never see (employer PF and gratuity).
- Gross Salary → In-Hand: Remove what is deducted from your payslip (employee PF, professional tax, income tax TDS).
Step 1: CTC → Gross Salary
A typical CTC structure (40% basic):
| Component | Formula | Example (₹12L CTC) |
|---|---|---|
| Basic Salary | 40% of CTC | ₹4,80,000 |
| HRA | 50% of basic (metro) | ₹2,40,000 |
| Special Allowance | Residual | ₹3,62,880 |
| Employer PF | 12% of basic (hidden) | ₹57,600 |
| Gratuity | 4.81% of basic (hidden) | ₹23,088 |
| = CTC | Sum of all | ₹12,00,000 ✓ |
| Gross Salary | CTC − Emp PF − Gratuity | ₹11,19,312 |
Step 2: Gross Salary → Monthly In-Hand
| Deduction | Rule | Amount (₹12L CTC) |
|---|---|---|
| Monthly Gross | Gross ÷ 12 | ₹93,276/month |
| Employee PF | 12% of basic, max ₹1,800/month | −₹4,800/month |
| Professional Tax | ₹200/month (most states) | −₹200/month |
| Income Tax TDS | Annual tax ÷ 12 (new regime 2025-26) | −₹0/month |
| Monthly In-Hand | Gross − PF − PT − TDS | ₹88,276/month |
CTC vs In-Hand Salary Table (New Regime, Metro, 40% Basic)
| CTC | Monthly Gross | PF | TDS | In-Hand/Month |
|---|---|---|---|---|
| ₹8L | ₹62,184 | −₹3,200 | −₹0 | ₹71,150 |
| ₹12L | ₹93,276 | −₹4,800 | −₹0 | ₹92,696 |
| ₹15L | ₹1,16,595 | −₹6,000 | −₹2,600 | ₹1,07,145 |
| ₹20L | ₹1,55,460 | −₹8,000 | −₹7,800 | ₹1,39,127 |
| ₹30L | ₹2,33,190 | −₹12,000 | −₹18,200 | ₹2,14,540 |
PF calculated at 12% of basic. PT ₹200/month. New regime FY 2025-26. TDS at ₹15L includes ~₹35,000 annual tax.
Why Your Offer Letter CTC Looks Higher Than Expected
- PF included in CTC: Many companies include both employer PF (12%) and gratuity (4.81%) in CTC. These ~17% are your CTC but not your gross salary.
- Variable pay: Some companies show 100% variable pay in CTC but only pay it if targets are met. Check "fixed CTC" vs "total CTC" in your offer.
- ESOP / RSU: Often included in CTC at notional value. These vest over 3–4 years and may be worth zero if the company doesn't perform.
- Insurance and perks: Medical insurance, meal vouchers, phone bills — sometimes inflated in CTC calculations.
Use the Salary Calculator to get your exact in-hand salary for any CTC level — it handles all deductions automatically.
Negotiation tip: Always negotiate on "fixed annual gross" not on "CTC". A company offering "₹15L CTC with PF in CTC" gives you less in-hand than another offering "₹14L CTC with PF over and above." Ask for the net monthly number before accepting any offer.
Use These Calculators
Sources: Income Tax Dept of India, Reserve Bank of India, AMFI India, SEBI. All content is for educational purposes only — not financial advice. Last updated: 18 May 2025.