The number on your offer letter is not the number that reaches your bank account. This works out the difference line by line — employer PF, gratuity provision, your own PF, ESI, professional tax and income tax — so you can see where every rupee of the gap goes.
| CTC | — |
| less employer PF | — |
| less gratuity provision | — |
| Gross salary | — |
| Basic | — |
| HRA | — |
| Special allowance | — |
| less employee PF | — |
| less ESI | — |
| less professional tax | — |
| less income tax | — |
| In-hand | — |
Cost to Company is exactly what it says — the employer's total annual cost of employing you. It includes two things that never reach your account, and then your own deductions come out of what is left:
Both PF and gratuity are driven off basic pay, so raising the basic share of a fixed CTC increases forced savings and reduces monthly take-home. Lowering it does the reverse. Two offers with an identical CTC can differ by several thousand rupees a month purely on this split — worth checking before comparing offers on the headline number.
FY 2025-26, after a ₹75,000 standard deduction:
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
A Section 87A rebate makes taxable income up to ₹12,00,000 effectively tax-free, with marginal relief just above that threshold so a small increase in income cannot cost more in tax than it adds in salary. A 4% health and education cess applies on top of the computed tax. Slabs are revised at each Union Budget — check the current year before relying on the figure.
CTC is everything the employer spends on you in a year, including their own PF contribution and a gratuity provision — money that never appears in your bank account. In-hand salary is what remains after those employer costs are removed and your own PF, professional tax and income tax are deducted. The gap is typically 20-30% of CTC.
There is no fixed statutory percentage, but 40-50% of CTC is the common range. A higher basic increases PF and gratuity — better long-term savings but lower monthly take-home. A very low basic to inflate take-home has been discouraged, since PF authorities can treat allowances as part of wages for contribution purposes.
It is part of your CTC but not part of your gross or in-hand salary. The employer's 12% goes into your EPF and EPS accounts directly. It is genuinely your money, but you cannot spend it now — which is why subtracting it is the first step in getting from CTC to gross.
ESI applies to employees earning a gross salary of ₹21,000 a month or less, in establishments covered by the ESI Act. The employee contributes 0.75% of gross and the employer 3.25%. Above ₹21,000 gross, neither contribution applies.
Professional tax is levied by state, not centrally, so it varies. Karnataka, Andhra Pradesh, Telangana, Gujarat and West Bengal commonly deduct ₹200 a month at higher salary levels; Maharashtra deducts ₹200 with ₹300 in February. Several states including Delhi, Haryana, Uttar Pradesh and Rajasthan levy none at all. The annual deduction is capped at ₹2,500 by the Constitution.
The new regime, using the FY 2025-26 slabs with the ₹75,000 standard deduction and the Section 87A rebate that makes income up to ₹12 lakh tax-free. Slabs are revised at each Union Budget, so verify the current year's rates before relying on the tax figure.
This is an estimate based on standard salary structures and the new tax regime. Your actual payslip depends on how your employer structures allowances, which state you work in, and the deductions you declare. Confirm with your HR or a qualified tax advisor before making a decision on it.
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