SalaryPulse

CTC to Salary Calculator in India

CTC to In-Hand Salary Calculator India

Calculate your exact monthly take-home salary after EPF, Gratuity, Professional Tax, and Income Tax (New vs Old Regime).

Salary Components

Parameters
₹ 12,75,000 / year
₹
INR

Quick presets:

50% (₹6,37,500/yr)
20% (Lower PF) 40% (Standard) 50% (Default) 70% (High PF)
₹0
₹
Annual

Variable pay is generally paid annually or semi-annually and is deducted from your fixed monthly pay.

Default: New Regime
Statutory Rule Highlights Applied:
  • EPF: 12% Basic (Employer & Employee)
  • Gratuity: ~4.81% of Basic ((Basic/26)*15*(1/12)/mo)
  • Professional Tax: ₹200/mo (₹2,400/yr flat)
  • Standard Deduction: ₹75,000 (New) / ₹50,000 (Old)
Monthly Net Take-Home Pay

Actual amount credited to your bank account

New Tax Regime
₹ 90,746 / month

Annual In-Hand (Fixed): ₹ 10,88,951

🎉 Switching to New Tax Regime saves you ₹18,200/year!

Tax under New Regime: ₹0 vs Old Regime: ₹18,200

Monthly EPF ₹ 6,375
Monthly TDS (Tax) ₹ 0
Monthly PT ₹ 200
Salary Distribution % of Total CTC
Take-Home: 85.4%
Taxes: 0.0%
PF & Gratuity: 14.6%

Detailed Summary Table

FY 2026-27
Component Monthly (₹) Annual (₹)
Annual CTC (Cost to Company) ₹ 1,06,250 ₹ 12,75,000
• Employer EPF (12% of Basic) ₹ 6,375 ₹ 76,500
• Gratuity provision (~4.81% of Basic) ₹ 2,554 ₹ 30,649
Fixed Gross Pay (Before employee deductions) ₹ 97,321 ₹ 11,67,851
• Employee EPF (12% of Basic) - ₹ 6,375 - ₹ 76,500
• Professional Tax (PT) - ₹ 200 - ₹ 2,400
• Monthly TDS (Income Tax with 4% Cess) - ₹ 0 - ₹ 0
Annual & Monthly Take-Home (Net In-Hand) ₹ 90,746 ₹ 10,88,951
Tax Computation Workings (Slabs, Rebates & Cess) Click to expand
In-Depth Editorial & Tax Guide

Mastering Indian Salary Structures & Taxation

An authoritative reference on CTC dissection, statutory retirement withholdings, and choosing the optimal tax regime for your financial goals.

01 Understanding CTC vs Gross vs In-Hand Salary

When entering a new employment contract in India, the figure prominently highlighted in your offer letter is Cost to Company (CTC). CTC represents the total financial burden your employer incurs to keep you on their payroll for a fiscal year. It encapsulates not just what you receive directly, but also employer-borne statutory benefits, healthcare premiums, gratuity provisions, and variable performance incentives.

Cost to Company (CTC)

Gross Salary + Employer EPF (12%) + Gratuity pool (~4.81%) + Insurance benefits + Annual Bonus.

Fixed Gross Salary

CTC minus Employer's Statutory Contributions (Employer PF & Gratuity) minus Variable Pay. This is your regular payroll base.

Net Take-Home (In-Hand)

Fixed Gross Salary minus Employee EPF (12%) minus Professional Tax (PT) minus Income Tax (TDS). This is your liquid bank credit.

The disparity between your annual CTC and net bank deposits frequently causes surprise among professionals. While your CTC may read ₹15,00,000, your actual monthly in-hand credit may hover around ₹98,000 to ₹1,05,000. Recognizing how employer contributions, provident funds, and progressive tax withholdings operate enables you to negotiate compensation structures strategically.

02 New Tax Regime vs Old Tax Regime: Which Should You Choose?

The Indian Ministry of Finance has structured the New Tax Regime as the default and most beneficial pathway for salaried workers. For Financial Year 2026-27, the standard deduction stands enhanced at ₹75,000, while the Section 87A rebate ceiling guarantees zero tax on net taxable incomes up to ₹12,00,000. Consequently, a salaried employee earning a gross salary up to ₹12,75,000 pays exactly zero income tax!

The New Tax Regime replaces bulky paperwork with streamlined 5% slab increments:

  • Up to ₹4,00,000: Nil
  • ₹4,00,001 to ₹8,00,000: 5%
  • ₹8,00,001 to ₹12,00,000: 10% (Fully rebated under Section 87A up to ₹12L)
  • ₹12,00,001 to ₹16,00,000: 15%
  • ₹16,00,001 to ₹20,00,000: 20%
  • ₹20,00,001 to ₹24,00,000: 25%
  • Above ₹24,00,000: 30%

When does the Old Tax Regime make sense? The Old Regime retains value only if your cumulative itemized deductions (Section 80C up to ₹1.5L, Section 80D health insurance up to ₹25k, Section 24b home loan interest up to ₹2L, and significant House Rent Allowance / HRA exemptions) exceed ₹3,75,000 to ₹4,25,000. Unless you are servicing a substantial housing loan or paying heavy metro rent with valid rent receipts, the New Tax Regime reliably produces higher take-home pay with zero investment lock-ins.

03 Statutory Deductions Explained (EPF, Gratuity, PT)

Indian employment frameworks mandate deductions that safeguard employee retirement and fund regional infrastructure.

1. Employees' Provident Fund (EPF)

Administered by the EPFO under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, EPF is a compulsory savings instrument. A standard 12% of Basic Pay is deducted from your gross earnings as the employee contribution. In parallel, your employer contributes another 12% (split between EPF and the Employees' Pension Scheme, EPS). In Indian corporate CTC packages, both components are deducted from your total package. EPF deposits earn guaranteed sovereign interest (typically ~8.15% to 8.25%).

2. Gratuity Provision

Under the Payment of Gratuity Act, 1972, gratuity is a statutory reward payable to an employee upon completion of 5 or more continuous years with an establishment. Organizations calculate the accrual as (Basic Salary / 26) × 15 × (1 / 12) per month, representing approximately 4.81% of your Basic Pay. Although accrued inside your CTC, gratuity is disbursed only upon tenure completion or resignation after 5 years.

3. Professional Tax (PT)

Professional Tax is a state-level tax levied by municipal and state authorities (such as Karnataka, Maharashtra, Telangana, and Tamil Nadu) on salaried professionals. Under Article 276 of the Constitution of India, PT cannot exceed ₹2,500 annually. In primary tech hubs, it is collected as a uniform ₹200 per month (with ₹300 in one calendar month).

Knowledge Base

Frequently Asked Questions (FAQs)

Clear, definitive answers to the most common Indian payroll, CTC structure, and taxation questions.

1. Why is my monthly bank in-hand credit lower than CTC / 12?

Your annual CTC (Cost to Company) includes several employer-side expenses and deferred retirement benefits that are never disbursed directly in your monthly payroll. Specifically:

  • Employer EPF (12% of Basic): Transferred directly to your EPFO account, not your checking account.
  • Gratuity Provision (~4.81% of Basic): Accrued as a statutory liability by the company and paid out only upon resignation after completing 5 continuous years.
  • Employee EPF (12% of Basic): Deducted from your gross wages into your retirement provident fund.
  • Professional Tax (PT): Fixed monthly withholding of ₹200 (₹2,400/yr) levied by state governments.
  • Annual Performance Bonus / Variable Pay: Included in the headline CTC figure, but withheld and disbursed only annually or semi-annually based on performance evaluations.
2. How does the ₹12.75 Lakh Zero-Tax threshold work under the New Tax Regime?

The ₹12.75 Lakh Zero-Tax milestone for salaried residents in FY 2026-27 is achieved through a synergy between the enhanced Standard Deduction and the Section 87A statutory rebate:

  1. Gross Salary: ₹12,75,000
  2. Standard Deduction (Section 16ia): Flat ₹75,000 deduction applicable automatically to all salaried individuals without requiring any investment receipts.
  3. Net Taxable Income: ₹12,75,000 − ₹75,000 = ₹12,00,000.
  4. Section 87A Full Rebate: In FY 2026-27, resident individuals with taxable income ≤ ₹12,00,000 receive a 100% tax rebate of up to ₹60,000, bringing your final income tax liability to exactly ₹0!
3. Is Employer EPF contribution deducted from my monthly salary?

In statutory terms under the Employees' Provident Funds Act, the 12% Employer EPF contribution is an employer-borne liability. However, in private-sector Indian corporate compensation structures, employers calculate their entire cost of hiring as CTC.

Consequently, the employer's 12% contribution is deducted from your headline CTC before arriving at your Gross Salary, and your own 12% Employee EPF is then deducted from your Gross Salary. Both 12% portions are deposited into your universal EPFO account every month.

4. Can I switch between the New and Old Tax Regimes every year?

Yes, for salaried individuals. Under Section 115BAC of the Income Tax Act, salaried employees who earn income from salary, house property, and other sources (and have no business or professional profits) possess the annual statutory right to switch between the New Tax Regime and Old Tax Regime at the time of filing their ITR on or before the due date (typically July 31st).

Note for business owners: Individuals earning business income or professional freelance profits can switch from the New Regime to the Old Regime only once in their lifetime; once they opt back into the New Regime, they cannot switch again.

5. How is Gratuity calculated, and am I eligible if I work less than 5 years?

Under the Payment of Gratuity Act, 1972, gratuity payout is computed via the formula:

Gratuity = (15 × Last Drawn Basic Salary × Number of Completed Years) / 26

For budgeting purposes in offer letters, companies provision approximately 4.81% of your Basic Pay monthly. By law, gratuity is legally payable only upon completing 5 continuous years of service with the same organization (relaxed only in the event of death or total disablement). If an employee resigns before completing 5 years, the accrued gratuity is forfeited to the company.

6. What is Professional Tax, and is it uniform across all Indian states?

No, Professional Tax (PT) is not uniform across India. It is a state-level tax authorized under Article 276(2) of the Constitution of India, subject to an upper cap of ₹2,500 per fiscal year.

States like Karnataka, Maharashtra, Telangana, Andhra Pradesh, Tamil Nadu, and West Bengal levy a standard ₹200 per month (with ₹300 deducted in one month of the year to reach the ₹2,500 annual threshold or flat ₹2,400). In contrast, union territories and states like Delhi, Haryana, Uttar Pradesh, and Rajasthan currently do not levy Professional Tax on salaried employees. Under Section 16(iii) of the Income Tax Act, all Professional Tax paid is 100% tax-deductible under the Old Regime.