CTC to In-Hand Salary: How to Calculate Take-Home Pay (With Example)

The short answer

In-hand salary is your CTC minus the parts you never receive as monthly cash (employer provident fund contribution, gratuity, insurance and any variable pay that is not guaranteed) minus the deductions taken from your pay (your own PF contribution, professional tax and income tax). The result, divided by 12, is your monthly take-home.

Offer letters differ. Use your own salary breakup for the exact numbers; the example below uses assumed percentages.

The parts of CTC

Component	What it is	Do you receive it monthly?
Basic salary	The fixed core of pay, often 30–50% of CTC	Yes
HRA	House rent allowance	Yes
Special or other allowances	The balancing part of pay	Yes
Employer PF	Employer’s contribution to your provident fund	No, it goes to your PF account
Gratuity	A benefit paid after the qualifying years of service	No
Variable pay or bonus	Performance-linked pay	Depends on the policy
Insurance and other benefits	Health cover and similar	No

A worked example

Assume a CTC of ₹12,00,000 a year. Assume basic is 40% of CTC, employer PF is 12% of basic, and gratuity is 4.81% of basic. These are assumptions to show the method, not rules that apply to every company.

Step	Calculation	Amount (₹ per year)
Basic	40% of 12,00,000	4,80,000
Employer PF	12% of 4,80,000	57,600
Gratuity	4.81% of 4,80,000	23,088
Gross salary	12,00,000 − 57,600 − 23,088	11,19,312
Gross per month	11,19,312 ÷ 12	93,276

From gross to in-hand

Now take the deductions out of the monthly gross. Your own PF contribution is typically the same 12% of basic: 57,600 a year, or 4,800 a month. Professional tax is a small state-specific amount; assume 200 a month. Income tax depends on the tax regime, your declarations and your income, so this example uses a placeholder of 6,000 a month.

Monthly item	Amount (₹)
Gross salary	93,276
Employee PF	− 4,800
Professional tax (assumed)	− 200
Income tax (placeholder)	− 6,000
In-hand salary	82,276

The tax figure is a placeholder, not a calculation. Use your payroll’s figure or a tax calculator for the real number.

How to read your own offer

Find the annual CTC and the monthly gross in the salary breakup.
Check which parts are fixed and which are variable.
Note the employer PF and gratuity: they are in the CTC but not in your monthly cash.
Subtract your PF, professional tax and expected tax from the monthly gross.
Ask HR for the in-hand figure if it is not shown.

Frequently asked questions

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

CTC is the total yearly cost to the employer. In-hand salary is the money credited to your bank account each month after deductions.

How do I calculate in-hand salary from CTC?

Subtract employer PF, gratuity and non-cash benefits from CTC to get gross salary, divide by 12, then subtract your PF, professional tax and income tax.

Is the employer PF part of the in-hand salary?

No. It is credited to your provident fund account, not paid monthly.

Why is my in-hand salary lower than expected?

Because CTC includes items you do not receive as monthly cash, and because of deductions such as PF, professional tax and tax deducted at source.

Does the tax regime change my in-hand salary?

Yes. The tax regime and your declarations change the tax deducted each month. Check with your employer or use a tax calculator.

Try these tools

Salary Converter

Convert pay between hourly, daily, weekly, monthly and annual figures using your own hours per week, days per week and paid weeks per year, free online.

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Tax Bracket Calculator

Estimate progressive tax with your own brackets. Enter limits, rates and a deduction to see tax per bracket, effective rate, marginal rate and take-home.

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Gratuity Calculator

Estimate gratuity with the statutory formula (last drawn salary x 15 x years of service / 26), including the over-six-months rounding rule. Free and private.

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