How to calculate in-hand salary from CTC?

To calculate in-hand salary from CTC, subtract employer PF, gratuity, employee PF, professional tax, and income tax. First compute gross salary (CTC minus employer PF and gratuity), then subtract employee deductions (employee PF, professional tax, income tax) from gross to get in-hand salary.

What percentage of CTC is in-hand salary?

Typically, in-hand salary is 60% to 75% of CTC depending on your salary level, tax slab, and employer structure. At lower CTC levels the ratio tends to be higher because income tax is lower. At higher CTC levels, income tax reduces the in-hand percentage significantly.

What is the difference between CTC, gross salary, and in-hand salary?

CTC (Cost to Company) is the total annual cost your employer spends on you, including employer PF and gratuity. Gross salary is CTC minus employer contributions, and it appears on your payslip before deductions. In-hand salary is the final amount credited to your bank after all employee deductions like PF, professional tax, and income tax.

Why is my in-hand salary less than CTC?

Your in-hand salary is less than CTC because CTC includes employer-side costs such as employer PF contribution (12% of basic) and gratuity provision (4.81% of basic). Additionally, employee PF, professional tax, and income tax are deducted from your gross salary before the remaining amount is credited to your bank.

Is EPF deducted from CTC or salary?

Both. Employer PF (12% of basic) is part of CTC and is deducted before arriving at gross salary. Employee PF (another 12% of basic) is deducted from your gross salary as an employee contribution. Together, 24% of your basic salary goes to the EPF account, but only the employee portion reduces your in-hand salary.

How does tax regime affect in-hand salary?

The new tax regime offers simpler slabs with a standard deduction of Rs 75,000 and a rebate up to Rs 12 lakh taxable income. The old regime allows deductions under 80C, 80D, HRA exemption, and others, but has higher base rates. Choosing the right regime based on your deductions can increase your in-hand salary.

What is gratuity and why is it deducted from CTC?

Gratuity is a retirement benefit calculated at 4.81% of basic salary (15/26 of monthly basic annually). Employers set aside this amount from CTC as a provision. It is payable to the employee after completing 5 years of continuous service. Since the employer bears this cost, it is part of CTC but not part of your monthly gross salary.

Does HRA affect in-hand salary?

HRA (House Rent Allowance) is fully part of your gross salary and is received every month as part of your in-hand salary. However, under the old tax regime, HRA can provide tax exemption if you are paying rent, which reduces your income tax and increases your in-hand salary. Under the new regime, HRA exemption is not available.

How to increase in-hand salary?

You can increase your in-hand salary by choosing the tax regime that results in lower tax, maximizing Section 80C deductions (up to Rs 1.5 lakh under old regime), claiming HRA exemption if renting (old regime), negotiating a higher CTC with your employer, and opting for the EPF cap at Rs 1,800 per month if your employer allows it.

In Hand Salary Calculator India | Free CTC to In Hand Salary Calculator 2025

Q: What is in-hand salary?

In-hand salary is the actual amount deposited in your bank account every month after all deductions from your CTC. These deductions include employer PF, gratuity, employee PF, professional tax, and income tax. It is also referred to as take-home salary or net salary.

In Hand Salary Calculator

Calculate your monthly in-hand (take-home) salary from CTC. See the complete breakup of basic salary, HRA, EPF, gratuity, professional tax, and income tax deductions. Updated for FY 2025-26.

In Hand Salary Calculator

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What is In Hand Salary?

In-hand salary is the actual amount that gets credited to your bank account every month after all deductions from your CTC (Cost to Company). It is also called take-home salary or net salary. This is the money you can actually spend, save, or invest.

Many employees are surprised when their first paycheck is significantly lower than the CTC mentioned in their offer letter. The gap exists because CTC includes several employer-side costs and mandatory deductions that never reach your bank account.

CTC is the total annual cost your employer spends on you, including employer PF, gratuity, insurance, and other benefits
Gross salary is CTC minus employer contributions such as employer PF and gratuity. This appears on your payslip before deductions
In-hand salary is gross salary minus employee deductions including employee PF, professional tax, and income tax
Typically, in-hand salary ranges from 60% to 75% of CTC depending on your salary level and applicable tax slab

How is In Hand Salary Calculated from CTC?

Calculating in-hand salary from CTC involves two stages. First, you subtract employer contributions from CTC to get gross salary. Then, you subtract employee deductions from gross salary to arrive at in-hand salary.

In Hand Salary = CTC − Employer PF − Gratuity − Employee PF − Professional Tax − Income Tax

Step 1: Gross Salary = CTC − Employer PF − Gratuity

Step 2: Employee Deductions = Employee PF + Professional Tax + Income Tax

Step 3: In Hand Salary = Gross Salary − Employee Deductions

Employer PF is 12% of basic salary (or capped at ₹1,800/month). Gratuity is calculated as 15/26 of monthly basic salary annually, which works out to about 4.81% of basic. Employee PF mirrors the employer PF amount. Professional tax is a state-level tax, typically ₹2,400 per year. Income tax depends on the chosen tax regime and applicable slabs.

CTC to In Hand Salary Calculation with Example

Let us calculate the in-hand salary for an employee with an annual CTC of ₹12,00,000, 50% basic salary, metro city, full EPF contribution, and the new tax regime.

Basic Salary: ₹12,00,000 × 50% = ₹6,00,000 per year

HRA: ₹6,00,000 × 50% (metro) = ₹3,00,000 per year

Employer PF: ₹6,00,000 × 12% = ₹72,000 per year

Gratuity: ₹6,00,000 × 15/26 ÷ 12 × 12 = ₹34,615 per year

Gross Salary: ₹12,00,000 − ₹72,000 − ₹34,615 = ₹10,93,385

Special Allowance: ₹10,93,385 − ₹6,00,000 − ₹3,00,000 = ₹1,93,385

Employee PF: ₹72,000 per year

Professional Tax: ₹2,400 per year

Taxable Income: ₹10,93,385 − ₹75,000 (standard deduction) = ₹10,18,385

Income Tax: ₹0 (Section 87A rebate applies as taxable income is under ₹12,00,000)

Annual In-Hand: ₹10,93,385 − ₹72,000 − ₹2,400 − ₹0 = ₹9,18,985

Monthly In-Hand: ₹9,18,985 / 12 = ₹76,582

In this example, the employee takes home about 76.5% of their CTC. This ratio decreases at higher salary levels where income tax becomes a larger deduction.

Why Knowing Your In Hand Salary Matters

Understanding your actual in-hand salary is essential for making informed financial decisions. Here are the key reasons why this number matters more than CTC.

Budget planning: Your monthly budget, rent, EMIs, and savings should be based on in-hand salary, not CTC. Knowing the exact take-home amount helps you plan expenses accurately
Loan eligibility: Banks and financial institutions consider your net monthly salary (in-hand) when assessing loan eligibility. A higher in-hand salary means better borrowing capacity
Job offer comparison: When comparing two job offers, the CTC alone can be misleading. An offer with lower CTC but fewer deductions may result in higher take-home pay
Tax planning: Understanding how different components of CTC affect your in-hand salary helps you choose the right tax regime and optimize deductions to maximize take-home pay

How to Use This In Hand Salary Calculator

This free calculator converts your annual CTC into monthly in-hand salary with a detailed breakup of all components and deductions. Follow these steps:

Step 1: Enter your annual CTC. This is the total Cost to Company mentioned in your offer letter or salary slip
Step 2: Select your basic salary percentage. The New Wage Code mandates a minimum of 50% basic. Some older salary structures use 40%
Step 3: Choose your city type. Metro cities (Delhi, Mumbai, Kolkata, Chennai) have 50% HRA, while non-metro cities have 40% HRA
Step 4: Select your EPF contribution type. Full 12% of basic or capped at ₹1,800 per month (for basic salary above ₹15,000)
Step 5: Choose your tax regime and click "Calculate In Hand Salary." Download the PDF report for a complete breakup with tax computation details

CTC vs Gross Salary vs In Hand Salary

These three salary terms are often confused. Here is a clear comparison of what each one means and how they relate to each other.

CTC (Cost to Company): The highest number. Includes everything your employer spends on you: basic salary, HRA, special allowance, employer PF, gratuity, insurance premiums, and other perks. This is the number mentioned in offer letters

Gross Salary: CTC minus employer-side contributions (employer PF and gratuity). This is what appears on your monthly payslip before deductions. It includes basic salary, HRA, and special allowance

In-Hand Salary: The final amount credited to your bank account. Gross salary minus employee PF, professional tax, and income tax. Typically 60% to 75% of CTC for most salary levels

For example, on a CTC of ₹10,00,000, your gross salary might be around ₹9,00,000 (after removing employer PF and gratuity), and your in-hand salary could be around ₹7,00,000 to ₹7,50,000 (after all employee deductions). The exact numbers depend on basic salary percentage, EPF option, and tax regime.

Components That Reduce CTC to In Hand Salary

Several mandatory deductions and employer contributions create the gap between CTC and in-hand salary. Here is what each component does and how it affects your take-home pay.

Employer PF (12% of basic): Deducted from CTC before calculating gross salary. This is the employer's contribution to your EPF account. It does not appear in your monthly payslip but goes directly to EPFO
Gratuity provision (4.81% of basic): Also deducted from CTC. This is the annual gratuity provision your employer sets aside. It is payable only after 5 years of continuous service
Employee PF (12% of basic): Deducted from your gross salary each month. This is your contribution to EPF, matching the employer's share. It goes to your PF account
Professional Tax (₹2,400/year): A state-level tax deducted monthly from gross salary. The exact amount varies by state but is capped at ₹2,500 per year
Income Tax: Depends on your taxable income and the chosen tax regime (new or old). The new regime offers a rebate for taxable income up to ₹12 lakhs, while the old regime allows deductions under 80C, 80D, and HRA exemption

Automating these calculations for your entire team can save hours every month. Petpooja Payroll handles CTC structuring, salary breakup, tax computation, and payslip generation for 30,000+ businesses across India.

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