How to Calculate In-Hand Salary from CTC in India

Your Cost to Company (CTC) is very different from your in-hand (take-home) salary. Understanding the deductions is key to financial planning. Here is a complete breakdown of what gets deducted from your gross salary in India.

CTC vs Gross Salary vs In-Hand Salary

CTC (Cost to Company): Total annual cost your employer incurs for you — includes your salary, employer's PF, gratuity provision, medical benefits, etc.
Gross Salary: Your actual monthly salary before deductions — Basic + HRA + all allowances. This is what you see in your offer letter as "monthly fixed pay."
In-Hand / Take-Home: Gross Salary minus all deductions — Employee PF, Professional Tax, Income Tax (TDS), and any loans/advances.

Key Deductions from Gross Salary

Employee PF (EPF): 12% of Basic Salary, capped at ₹1,800/month if Basic ≤ ₹15,000 (statutory cap). For higher basics, many companies apply 12% on actual basic.
Professional Tax: State-level tax, ranges from ₹0 (many states) to ₹2,500/year. Karnataka charges ₹200/month for income >₹15,000/month.
Income Tax (TDS): Based on your estimated annual income and chosen regime. Divided by 12 and deducted monthly. This is the biggest variable.
HRA Exemption: If you pay rent, HRA exemption under Section 10(13A) reduces taxable income in Old Regime. Not available in New Regime.

New Tax Regime vs Old Tax Regime — FY 2026-27

The New Tax Regime is the default from FY 2024-25 onwards. It offers lower slab rates but most deductions/exemptions (HRA, 80C, 80D) are not available. The Old Regime allows all deductions but has higher base rates.

New Regime Tax Slabs (FY 2026-27): ₹0-4L: Nil · ₹4-8L: 5% · ₹8-12L: 10% · ₹12-16L: 15% · ₹16-20L: 20% · ₹20-24L: 25% · Above ₹24L: 30%. Rebate u/s 87A: Zero tax for income up to ₹12L.

Frequently Asked Questions

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

CTC includes components that you never directly receive — employer's PF contribution (12% of basic), gratuity provision (4.81% of basic), and sometimes medical/accident insurance premiums. Additionally, your own PF contribution (12%), professional tax, and income tax TDS are deducted from gross. All these together can reduce in-hand to 65-75% of CTC for mid-to-senior level employees.

Is special allowance fully taxable?

Yes, special allowance is fully taxable under both Old and New regimes. It is a residual component — everything that is not specifically exempt (like HRA, LTA, conveyance) gets classified as special allowance and added to taxable income.

How does the New Labour Code affect take-home salary?

The Code on Wages 2019, once implemented, mandates that Basic Salary must be at least 50% of gross wages. For many IT employees where basic is currently 30-40%, this would increase PF contributions (both employee and employer) which reduces take-home. This also increases gratuity and other basic-linked benefits. Most states have not yet notified implementation as of 2026.

In-Hand Salary Calculator India

How to Calculate In-Hand Salary from CTC in India

CTC vs Gross Salary vs In-Hand Salary

Key Deductions from Gross Salary

New Tax Regime vs Old Tax Regime — FY 2026-27

Frequently Asked Questions

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