What is the Take Home Salary?
CTC (Cost to Company) is everything your employer spends on you, including money you never see: their PF contribution, the gratuity provision, and sometimes insurance premiums. Your in-hand salary is what survives after those, plus your own PF, income tax and professional tax.
For most salaried employees, in-hand lands at roughly 65–80% of CTC, with the gap widening as income rises.
Formula & worked example
Peel the layers off the package:
In-hand = Gross − employee PF − income tax − professional tax
Worked example: ₹18,00,000 CTC with 40% basic and ₹1.5L variable. Basic is ₹7.2L, so PF is ₹86,400 each side and the gratuity provision ₹34,632. Fixed gross comes to ₹15,28,968; after ₹86,400 of your own PF, income tax of ₹1,25,625 under the new regime and ₹2,400 professional tax, monthly in-hand is about ₹1,09,545, with the ₹1.5 lakh variable paid separately.
How to use this take home salary calculator
- Enter your total CTC from the offer letter.
- Set basic as a percentage — usually 40–50%; it drives PF and gratuity.
- Separate out variable pay, which is not paid monthly.
- Professional tax is state-specific, typically ₹2,400 a year where it applies.
Smart tips
- A higher basic means more PF — lower in-hand today but more retirement corpus and higher gratuity.
- Employer PF is part of CTC but is your money; count it as savings, not as a deduction lost.
- Variable pay is not guaranteed. Budget on fixed pay only, and treat bonuses as a windfall.
- Compare offers on fixed in-hand, not CTC — two ₹18 lakh packages can differ by ₹1.5 lakh a year in what you actually receive.
Frequently asked questions
Why is my in-hand salary so much lower than CTC?
CTC includes employer PF, gratuity provision, insurance and variable pay. Together with your own PF and income tax these typically consume 20–35% of the package.
How much is deducted from salary for PF?
12% of basic from you, matched by 12% from your employer. Only your half reduces in-hand; the employer half is already inside CTC.
Is gratuity part of CTC?
Most employers include the annual gratuity provision (about 4.81% of basic) in CTC, even though you only receive it after five years of service.
Can I reduce my PF contribution?
If your basic exceeds ₹15,000 you may limit PF to the statutory ₹1,800 a month, subject to employer policy. It raises in-hand but reduces retirement savings.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: Income Tax Department — slab rates, s.87A rebate, surcharge and 4% cess, AY 2026-27 (page updated 9 Jul 2026), Maharashtra GST Department — Profession Tax Act 1975 rate schedule: ₹200 a month above ₹10,000, ₹300 in February, ₹2,500 a year (as on 31 Mar 2025), Ministry of Labour & Employment — Payment of Gratuity Act, 1972, s.4: 15 days’ wages, 26-day divisor. How we check these numbers.