Last Updated: March 2026 Reviewed by CA & CS Team · Patron Accounting LLP

CTC to In-Hand Salary Calculator — Take Home Pay 2026

TL;DR

This CTC to In-Hand Salary Calculator converts your annual Cost to Company (CTC) into monthly take-home pay. It breaks down your salary into Basic, HRA, Special Allowance, and deducts employer PF, gratuity, employee PF, professional tax, and income tax under both old and new regimes for FY 2025-26. Shows which tax regime gives you higher take-home. Updated with Budget 2025 slabs and ₹75,000 standard deduction.

Calculate Your In-Hand Salary

Annual CTC (₹)

Annual Bonus in CTC (₹)

Basic Salary (% of Gross)

City Type (for HRA)

EPF Contribution

Professional Tax State

How CTC to In-Hand Salary Calculation Works

Your CTC (Cost to Company) is not what you receive in your bank account. The actual in-hand salary is typically 60-70% of CTC after various deductions. Here is the step-by-step process:

Step 1: Derive Gross Salary
Gross Salary = CTC − Employer PF − Gratuity − Bonus (if any)

Step 2: Split Gross into Components
Basic = Gross × Basic% (typically 40-50%)
HRA = Basic × 50% (metro) or 40% (non-metro)
Special Allowance = Gross − Basic − HRA

Step 3: Calculate Deductions
Employee PF = 12% of Basic (capped at ₹15,000/mo)
Professional Tax = State-specific (max ₹2,500/yr)
Income Tax = As per chosen tax regime slabs

Step 4: In-Hand Salary
Monthly In-Hand = (Gross − Employee PF − Prof Tax − Income Tax) ÷ 12

CA Tip: When comparing job offers, always calculate the in-hand salary rather than comparing CTC. A ₹15 LPA offer with 20% variable pay will often give lower monthly in-hand than a ₹13 LPA offer with 100% fixed pay. Our calculator excludes variable/bonus from the monthly calculation since it is not guaranteed every month. Verify with the EPFO portal for your PF contribution details.

Understanding Salary Components

Basic Salary

The core fixed component, typically 40-50% of gross salary. It is fully taxable and determines HRA, PF, and gratuity calculations. A higher basic increases retirement benefits but also increases tax liability. Most companies set basic at 40% to balance tax efficiency with employee benefits. There is no statutory minimum for basic in the private sector, though the Code on Wages, 2019 proposes that basic should be at least 50% of gross — though implementation rules are still pending.

House Rent Allowance (HRA)

Provided to employees living in rented accommodation. HRA is 50% of basic for metro cities (Mumbai, Delhi, Kolkata, Chennai) and 40% for non-metro cities. Tax exemption under Section 10(13A) is the minimum of: actual HRA received, rent paid minus 10% of basic, or 50%/40% of basic. If you do not live in rented housing, the entire HRA is fully taxable.

Employee Provident Fund (EPF)

Both employer and employee contribute 12% of basic salary to EPF. The statutory cap is ₹15,000 per month basic — meaning maximum contribution is ₹1,800/month each. Of the employer's 12%, 8.33% goes to EPS (Employees' Pension Scheme) and 3.67% to the EPF account. Employee contribution qualifies for Section 80C deduction. Check your balance at epfindia.gov.in.

Gratuity

A retirement benefit under the Payment of Gratuity Act, 1972 payable after 5 years of continuous service. For CTC purposes, employers provision approximately 4.81% of basic salary annually. Formula: (Basic × 15 ÷ 26) × Years of Service. Gratuity is part of CTC but is not paid monthly — it is paid only on separation after completing 5 years.

Professional Tax

A state-level employment tax with a constitutional maximum of ₹2,500 per year. Rates vary by state — Maharashtra charges ₹2,400/year for salaries above ₹10,000/month, Karnataka charges ₹2,400/year, West Bengal charges ₹2,500/year. States like Delhi, Haryana, UP, Rajasthan, and Punjab do not levy professional tax. It is deductible from taxable income under Section 16(iii).

Note: ESI (Employee State Insurance) applies if gross salary is ₹21,000/month or below. Employee contributes 0.75% and employer 3.25%. For most mid-to-senior salaries, ESI does not apply. If your gross salary is above ₹21,000/month, ESI contribution is zero. Check eligibility at esic.gov.in.

Income Tax Slabs FY 2025-26 (AY 2026-27)

The Union Budget 2025 introduced revised slabs for the new tax regime. The new regime is the default unless the employee specifically opts for the old regime. Here are both sets of slabs:

New Tax Regime (Default) — FY 2025-26

Income Slab	Tax Rate
Up to ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

Standard deduction: ₹75,000. Rebate under 87A: tax payable is nil if taxable income does not exceed ₹12,00,000. No HRA exemption, 80C, 80D, or home loan deductions allowed under new regime.

Old Tax Regime (Optional) — FY 2025-26

Income Slab	Tax Rate
Up to ₹2,50,000	Nil
₹2,50,001 – ₹5,00,000	5%
₹5,00,001 – ₹10,00,000	20%
Above ₹10,00,000	30%

Standard deduction: ₹50,000. Allows deductions under 80C (₹1.5L), 80D (health insurance), HRA exemption, home loan interest (₹2L), NPS employer contribution, and other sections.

Tax Saving Tips for Salaried Employees

Under Old Regime

Maximise Section 80C (₹1.5L via EPF, PPF, ELSS, life insurance), claim HRA exemption with rent receipts, use Section 80D for health insurance (₹25K self + ₹50K parents), home loan interest under Section 24(b), and NPS contribution under 80CCD(1B) for additional ₹50K deduction.

Under New Regime

The new regime offers lower tax rates but no deductions except standard deduction (₹75K) and employer NPS contribution under 80CCD(2). For employees without significant investments or home loans, the new regime often gives better results for salaries up to ₹12-15 LPA. The rebate under Section 87A makes income up to ₹12L effectively tax-free.

Salary Restructuring

Ask your employer to restructure salary to include NPS employer contribution (tax-free up to 14% of basic under new regime), meal vouchers (₹50/meal, tax-free under old regime), and car lease (reduces taxable perquisite). A CA can help optimise your salary structure legally. Patron Accounting payroll services →

Need Payroll or Tax Planning Help? Patron Accounting provides payroll processing, salary structuring, TDS computation, and tax planning advisory for employees and businesses across India. Get expert payroll help →

Frequently Asked Questions About CTC and In-Hand Salary

Derive gross salary by subtracting employer PF and gratuity from CTC. Then subtract employee PF (12% of basic), professional tax (up to ₹2,500/year), and income tax from gross salary. The result divided by 12 is your monthly in-hand salary. Typically 60-70% of CTC reaches your bank account — the rest goes to PF, gratuity, and taxes.

CTC is the total annual cost to the employer including basic, allowances, employer PF, gratuity, and insurance. In-hand salary is the net amount credited monthly after deducting employee PF, professional tax, and income tax. CTC includes components like employer PF and gratuity that never reach your bank. A ₹10L CTC typically yields ₹60-65K monthly in-hand.

Basic salary typically ranges from 40-50% of CTC. There is no statutory minimum in the private sector. Higher basic increases PF contributions (better for retirement) but also increases tax liability. Most companies set basic at 40% of gross to balance tax efficiency with employee benefits. The proposed Code on Wages mandates 50% minimum but rules are pending.

Both employer and employee contribute 12% of basic salary (capped at ₹15,000/month basic = ₹1,800/month each). Employee contribution is deducted from gross salary. Employer contribution is part of CTC but goes directly to your EPF account, not your bank. Of employer 12%, 8.33% goes to EPS (pension) and 3.67% to EPF. Employee PF qualifies for 80C deduction.

Professional tax is a state-level employment tax capped at ₹2,500/year constitutionally. Maharashtra and Karnataka charge ₹2,400/year, West Bengal and Telangana ₹2,500/year. Delhi, Haryana, UP, Rajasthan, and Punjab do not levy it. The amount varies by salary slab within each state. It is deductible from taxable income under Section 16(iii) of the Income Tax Act.

HRA is typically 50% of basic for metro cities (Mumbai, Delhi, Kolkata, Chennai) and 40% for non-metro. Tax exemption under Section 10(13A) is the lowest of: actual HRA received, rent paid minus 10% of basic, or 50%/40% of basic. If you don't live in rented accommodation, the entire HRA is fully taxable. Submit rent receipts to claim the exemption.

New regime FY 2025-26: up to ₹4L nil, ₹4-8L at 5%, ₹8-12L at 10%, ₹12-16L at 15%, ₹16-20L at 20%, ₹20-24L at 25%, above ₹24L at 30%. Standard deduction ₹75,000. Rebate under 87A makes income up to ₹12L effectively tax-free. No HRA, 80C, 80D deductions allowed — only standard deduction and employer NPS.

Gratuity is a retirement benefit under the Payment of Gratuity Act, 1972, payable after 5 years of service. Formula: Basic × 15 ÷ 26 × Years of Service. Employers provision ~4.81% of basic annually in CTC. It is not paid monthly — only on separation after 5 years. Gratuity up to ₹20 lakhs is tax-exempt. It is part of CTC but not part of monthly in-hand salary.

New regime is better if you lack significant deductions (80C, 80D, HRA, home loan). For income up to ₹12L, new regime gives zero tax via rebate. For higher incomes, compare total deductions available in old regime against lower rates in new regime. Use our calculator to compare both — it shows in-hand salary under each regime side by side.

EPF is calculated on basic salary capped at ₹15,000/month — meaning maximum mandatory contribution is ₹1,800/month each (employer and employee). If basic exceeds ₹15,000, some employers restrict PF to statutory limit while others contribute on actual basic. Higher PF means lower in-hand but larger retirement corpus. Voluntary PF above the cap is allowed.

Components in CTC but not in monthly in-hand: employer PF (12% of basic), gratuity provision (~4.81% of basic), employer ESI (3.25% if applicable), group health insurance premium, variable pay or bonus (paid quarterly/annually, not monthly), food coupons, and company car lease. These are real costs to the employer but do not appear in your monthly bank credit.

Yes — a CA can restructure salary to maximise take-home legally. This includes optimising basic percentage, HRA, meal vouchers, NPS employer contribution, car lease perquisite, and advising on the best tax regime. Patron Accounting provides salary structuring advisory and complete payroll management for Indian businesses across all entity types.