How is in-hand salary calculated from CTC?
Your in-hand salary is your CTC minus employer PF, gratuity, employee PF, professional tax and income tax (TDS). It is the amount that reaches your bank account each month.
- 1
Start with annual CTC: the total your employer spends on you in a year.
- 2
Remove employer contributions: employer PF and gratuity. This gives your gross salary.
- 3
Deduct employee PF: 12% of basic, often capped at ₹1,800 a month.
- 4
Deduct professional tax: which depends on your state.
- 5
Deduct income tax (TDS): based on your tax regime. Divide by 12 for monthly in-hand pay.
Example: in-hand salary for ₹18 LPA CTC
Assumptions: basic is 50% of CTC, PF is capped, gratuity is part of CTC, metro city, new tax regime.
| Step | Annual | Monthly |
|---|---|---|
| Annual CTC | ₹18,00,000 | ₹1,50,000 |
| − Employer PF (₹1,800 × 12) | ₹21,600 | ₹1,800 |
| − Gratuity (4.81% of ₹9,00,000 basic) | ₹43,290 | ₹3,608 |
| = Gross salary | ₹17,35,110 | ₹1,44,593 |
| − Employee PF | ₹21,600 | ₹1,800 |
| − Professional tax | ₹2,400 | ₹200 |
| − Income tax incl. 4% cess (taxable income ₹16,60,110) | ₹1,37,303 | ₹11,442 |
| = In-hand salary | ₹15,73,807 | ₹1,31,151 |
So about 87% of this CTC reaches the employee's bank. Try your own numbers above.
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Salary components explained
| Component | What it is | Paid by |
|---|---|---|
| Basic salary | Fixed core pay; PF and gratuity are based on it | Employer |
| HRA | House rent allowance, part of gross pay | Employer |
| Special allowance | Balancing amount after basic and HRA | Employer |
| Provident fund (PF) | Retirement savings: 12% of basic from each side | Both |
| Gratuity | Paid when you leave after eligible service | Employer |
| Professional tax | State tax on employment, up to ₹2,500 a year | Employee |
| Income tax (TDS) | Tax deducted monthly based on your regime | Employee |
New vs old tax regime: which gives more in-hand pay?
Under the new regime, there is no income tax if your taxable income is up to ₹12 lakh, thanks to the Section 87A rebate. With the ₹75,000 standard deduction, salaried people earning up to ₹12.75 lakh pay no tax.
The old regime can still work out better if you claim large deductions such as HRA exemption, 80C and home loan interest. Compare both regimes in our TDS calculator.
Common mistakes when reading your CTC
CTC includes employer PF and gratuity, which you don't get monthly.
Performance bonus in CTC is paid only if targets are met.
It changes your in-hand pay slightly by state.
It raises PF and gratuity, which can lower monthly in-hand pay.
Frequently asked questions
How do I calculate my in-hand salary from CTC?
Subtract employer PF and gratuity from your CTC to get gross salary. Then subtract employee PF, professional tax and income tax. Divide the result by 12 for your monthly in-hand salary.
What percentage of CTC is in-hand salary?
It depends on your basic salary, PF and tax. In the ₹18 lakh example on this page, about 87% of CTC reaches the bank. Use the calculator above for your exact number.
Why is my in-hand salary lower than CTC divided by 12?
CTC includes employer PF and gratuity, which are not paid monthly. Employee PF, professional tax and TDS are also deducted from your monthly pay.
How much PF is deducted from my salary?
Employee PF is 12% of basic salary plus DA. Many employers apply it on a wage ceiling of ₹15,000, which caps it at ₹1,800 a month.
Is there no income tax up to ₹12 lakh in the new regime?
Yes. Under the new regime, taxable income up to ₹12 lakh gets a full rebate under Section 87A. With the ₹75,000 standard deduction, salaried income up to ₹12.75 lakh pays no tax.
How much professional tax is deducted?
It depends on your state, up to ₹2,500 a year. Some states, such as Delhi, do not levy it. This calculator uses ₹2,400 a year as a default.
Is HRA part of in-hand salary?
Yes. HRA is part of your gross salary and is paid every month. An HRA tax exemption is available only under the old tax regime.
Can HR use this calculator to create salary structures?
Yes, for one employee at a time. To build CTC structures and run payroll for your whole team, HR teams use HROne Payroll.
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