Why is my in-hand salary so much lower than my CTC?

Because CTC counts money that never reaches you. The employer PF contribution and the annual gratuity provision are both real costs to your employer, but they go into savings pots rather than your bank account. Add income tax and your own PF on top and a 15% to 30% gap is completely normal.

Is a higher basic pay good or bad?

It cuts your monthly take-home and raises your retirement savings, because PF and gratuity are both percentages of basic. If you need cash now, a lower basic helps. If you are thinking about the long run, a higher basic is quietly building a bigger corpus.

Which regime should I pick?

If your deductions are small, the new regime almost always wins. The old regime only pulls ahead once you are claiming a large amount through 80C, HRA and home-loan interest together. Our old versus new regime calculator finds the exact point where they cross over.

CTC to in-hand salary calculator

Cost to company is what you cost your employer for a year. In-hand salary is what lands in your account each month. Those two numbers are never the same, and the gap is usually somewhere between 15% and 30%.

Two of the items in your CTC never appear on a payslip at all: the employer share of provident fund, and the money set aside each year to pay your gratuity when you eventually leave. This calculator strips those out first, then works down through the deductions that do show up.

Monthly in-hand salary

₹88,268

₹10,59,212 a year, which is 88.3% of your CTC

Annual CTC: ₹12,00,000
Basic pay: ₹4,80,000
Less: employer PF contribution: - ₹57,600
Less: gratuity provision: - ₹23,088
Gross salary: ₹11,19,312
Less: your own PF contribution: - ₹57,600
Less: income tax and cess: - ₹0
Less: professional tax: - ₹2,500
Annual in-hand: ₹10,59,212

Everything above is worked out in your browser. Nothing you type is sent to us or saved anywhere.

How this is worked out

Basic pay is worked out as your chosen share of CTC. Everything else follows from it.
Employer PF is 12% of basic. It is part of your CTC but it is paid into your provident fund account, so it is removed before gross salary.
The gratuity provision is 4.81% of basic, which is fifteen days of pay in a twenty-six day month.
Income tax is calculated on gross salary after the standard deduction, using FY 2026-27 slabs.
Professional tax is assumed at the national annual ceiling of ₹2,500.

What this does not cover

Real payslips carry extras this calculator does not model: meal cards, telephone reimbursement, LTA, a company car lease. Each one shifts the taxable figure a little.
Some employers cap PF at the statutory wage of ₹15,000 a month instead of your actual basic. That raises in-hand pay and lowers retirement savings.
Variable pay and joining bonuses are often quoted inside CTC but paid only once a year, or once ever.

Questions people ask

Why is my in-hand salary so much lower than my CTC?: Because CTC counts money that never reaches you. The employer PF contribution and the annual gratuity provision are both real costs to your employer, but they go into savings pots rather than your bank account. Add income tax and your own PF on top and a 15% to 30% gap is completely normal.
Is a higher basic pay good or bad?: It cuts your monthly take-home and raises your retirement savings, because PF and gratuity are both percentages of basic. If you need cash now, a lower basic helps. If you are thinking about the long run, a higher basic is quietly building a bigger corpus.
Which regime should I pick?: If your deductions are small, the new regime almost always wins. The old regime only pulls ahead once you are claiming a large amount through 80C, HRA and home-loan interest together. Our old versus new regime calculator finds the exact point where they cross over.

Where these figures come from

Rates and rules on this page were last checked against the source on 31 August 2026. Tax law changes; check the source before you rely on a number for a decision.

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