You got an offer letter saying ₹12 LPA and assumed ₹1 lakh would land in your account every month. Then your first salary arrives — and it's closer to ₹83,000. Where did the rest go? Understanding the gap between CTC and in-hand salary is essential for anyone negotiating a job or planning their finances.
CTC vs In-Hand — The Core Difference
- CTC (Cost to Company) = everything the company spends on you in a year, including amounts you never see directly.
- In-hand (take-home) = what actually reaches your bank account after all deductions.
In-hand is typically 25%–35% lower than CTC.
A Typical CTC Breakup (₹12 LPA Example)
| Component | Annual | Notes |
|---|---|---|
| Basic Salary | ₹6,00,000 | ~50% of CTC; base for HRA, PF, gratuity |
| HRA | ₹2,40,000 | Partly tax-exempt if you pay rent |
| Special Allowance | ₹2,10,000 | Fully taxable |
| Employer PF | ₹72,000 | Part of CTC, not paid to you |
| Gratuity | ₹28,800 | Part of CTC, paid only on exit (after 5 yrs) |
| Other benefits | ₹49,200 | Insurance, meal cards, etc. |
| Total CTC | ₹12,00,000 |
What Gets Deducted From Your Pay
From the portion that is actually salary, these reduce your take-home:
- Employee PF — 12% of basic (₹72,000/year here)
- Professional Tax — up to ₹2,500/year (state-dependent)
- Income Tax (TDS) — based on your slab and regime
Plus, employer PF and gratuity (~₹1 lakh here) are part of CTC but never reach your monthly account — they go to your retirement corpus. That alone explains a big chunk of the gap.
Estimated In-Hand for ₹12 LPA
After removing employer PF + gratuity from CTC, then deducting employee PF, professional tax and income tax, the monthly take-home works out to roughly ₹80,000–₹88,000 — the exact figure depends on whether you choose the old or new tax regime.
The New 50% Basic Rule
Under the Code on Wages (effective late 2025, rollout from April 2026), basic + DA must be at least 50% of CTC. A higher basic means higher PF and gratuity — slightly lower take-home today, but a bigger retirement corpus tomorrow.
Maximise Your Take-Home
- Claim HRA if you pay rent — see how to calculate HRA exemption.
- Pick the right tax regime — compare with our new vs old regime guide.
- Use 80C and 80D deductions fully (old regime).
Calculate Your Real Tax
The biggest variable in your take-home is income tax. Enter your CTC into our Income Tax Calculator to see your tax and monthly in-hand under both regimes — it does the slab math for you instantly.