What is In-Hand Salary?
An in-hand monthly salary is computed by taking the gross annual CTC and subtracting employer PF/gratuity benefits, employee PF (12% of basic, capped at ₹15,000 wage ceiling), professional tax (usually ₹2,500/year), and income tax under the selected tax regime.
Cost to Company (CTC) represents the total expense an employer incurs to employ a candidate. It is different from gross salary and net take-home salary because it includes components like employer Provident Fund contributions, gratuity provisions, health insurance premiums, and other non-cash benefits. Note that tax computations are based on the New Tax Regime which is the default in India for the assessment year.
Formula
Take-home salary = CTC - Employer PF - Gratuity - Employee PF - Professional Tax - Income Tax. Basic salary determines PF and gratuity components.
Deductions Formula:
Take-Home = CTC − Employer EPF − Gratuity − Employee EPF − PT − Income Tax Basic Salary = CTC × Basic% Employer EPF = 12% of Basic (subject to ₹15,000/month limit) Employee EPF = 12% of Basic (subject to ₹15,000/month limit)
Worked Example
Worked Example Model:
- Annual CTC: ₹12,00,000
- Basic Salary percentage: 40%
Steps:
- Calculate Basic Salary: ₹12,00,000 * 40% = ₹4,80,000.
- Employer PF deduction: 12% of basic (capped at ₹15,000 wage ceiling per month) = 12% * ₹15,000 * 12 = ₹21,600.
- Gratuity provision: 4.81% of basic = ₹23,088.
- Gross Annual Salary: CTC - Employer PF - Gratuity = ₹11,55,312.
- Employee PF deduction: 12% of basic (capped) = ₹21,600.
- Professional Tax (PT) deduction: ₹2,500.
- Standard Deduction under New Regime: ₹75,000.
- Taxable income: ₹11,55,312 - ₹75,000 = ₹10,80,312.
- Calculate New Regime Income Tax: ₹74,547 (including cess).
- Annual in-hand salary: ₹11,55,312 - ₹21,600 - ₹2,500 - ₹74,547 = ₹10,56,665.
Gross Salary: ₹11,55,312. Annual In-Hand: ₹10,56,665. Monthly Take-Home: ₹88,055.
How to use this calculator
Enter your annual CTC in rupees and specify the percentage of basic salary (typically 40% or 50%). The calculator computes the deductions and shows the final monthly take-home salary under the New Tax Regime.
Enter your annual CTC in rupees and specify the percentage of basic salary (typically 40% or 50%). The calculator computes the deductions and shows the final monthly take-home salary under the New Tax Regime. By increasing or decreasing the basic salary percentage, you can adjust how much of your monthly pay goes to retirement funds versus cash take-home.