How it works
- Basic pay is taken as 50% of CTC unless you change it: under the Labour Codes in force since 21 November 2025, wages (basic plus dearness allowance) must be at least half of total pay, and PF and gratuity are worked out on them. Older offers often used 40%.
- Employer PF (12% of basic) and gratuity (4.81% of basic) are part of CTC but are not paid to you each month, so they come off first. Your own PF (12% of basic) is then deducted from salary. If your company calculates PF on the ₹15,000 wage ceiling, choose the capped option (₹1,800 a month).
- Income tax uses the new regime slabs for FY 2026-27: nil up to ₹4 lakh, then 5%, 10%, 15%, 20%, 25% and 30% in ₹4 lakh steps. Salaried employees get a ₹75,000 standard deduction, and the rebate makes taxable income up to ₹12 lakh tax-free, with marginal relief just above it. 4% health and education cess is added.
- Professional tax is a state tax of up to ₹2,500 a year; it is ₹2,400 by default and zero in states without it. It is not deductible in the new regime.
- Variable pay and bonuses are part of CTC but usually paid once a year, so the monthly figure without them is shown separately. Treat results above ₹50 lakh as estimates: surcharge is applied without marginal relief.
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Questions
What is the difference between CTC and in-hand salary?
CTC (cost to company) is everything the employer spends on you in a year, including employer PF, gratuity and variable pay. In-hand salary is what reaches your bank after your PF, professional tax and income tax are deducted.
What is the in-hand salary for a 6 LPA CTC?
About ₹42,598 a month with basic pay at 50% of CTC, PF on full basic, gratuity inside CTC and ₹2,400 professional tax. There is no income tax at this level under the new regime.
Is a salary up to ₹12 lakh tax-free in FY 2026-27?
Under the new regime, taxable income up to ₹12 lakh has no tax after the rebate. Salaried employees first get a ₹75,000 standard deduction, so gross salary up to ₹12.75 lakh pays no income tax. Because employer PF and gratuity are excluded from gross salary, the CTC can be a little higher.
Why is my in-hand salary lower than CTC divided by 12?
Employer PF and gratuity are inside CTC but not paid monthly, your own PF is deducted, variable pay usually comes once a year, and professional tax and income tax are cut from salary.
Does this calculator use the old tax regime?
No. It uses the new regime, which is the default for salaried employees. The old regime depends on your own deductions such as HRA, 80C and home loan interest, so compare it with your actual investments before choosing it.
What should I write as expected CTC in a job form?
One yearly figure in the unit the form asks for, such as 600000 or 6 LPA. Use this calculator to check what that CTC means per month before you quote it.
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