How CTC becomes take-home pay
- Gross salary = CTC − employer's PF (12% of basic) − gratuity (if it is part of CTC, about 4.81% of basic).
- Deductions: your own PF (12% of basic), professional tax (set by your state, at most ₹2,500 a year) and income tax.
- In-hand = gross − your PF − professional tax − income tax, divided by 12 for the monthly figure.
Income tax uses the FY 2026-27 slabs. The new regime allows a ₹75,000 standard deduction and a full rebate up to ₹12 lakh of taxable income. The old regime allows ₹50,000 standard deduction plus 80C (your PF counts towards it), HRA, 80D and professional tax.
Example
CTC ₹12,00,000 with basic at 40% (₹4,80,000 a year) and PF on full basic: employer PF is ₹57,600, so gross salary is ₹11,42,400. In the new regime taxable income is ₹10,67,400, which is below ₹12 lakh, so tax is nil. After your PF (₹57,600) and professional tax (₹2,400), in-hand pay is ₹10,82,400 a year, or ₹90,200 a month.
The same CTC in the old regime with no other deductions pays ₹1,27,109 tax, leaving ₹79,608 a month. At ₹25 lakh CTC in the new regime, tax is ₹2,87,300 and in-hand is about ₹1,64,192 a month.
Tips
- Bonuses and variable pay are usually part of CTC but paid once a year; remove them from CTC to see your regular monthly pay.
- Your employer deducts tax (TDS) evenly over the year based on the regime you declare, so payslips can differ month to month.
Paid outside India? Work out your take-home pay with the UK, US or Canada tax calculator.