How to Calculate In-Hand Salary from CTC?
When you receive a job offer, the compensation is usually presented as CTC (Cost to Company). However, CTC is not the amount that hits your bank account every month. Understanding the difference between CTC, Gross Salary, and Net (In-Hand) Salary is crucial for financial planning.
What is included in CTC?
CTC includes your direct benefits (Basic Pay, HRA, Special Allowances) as well as indirect benefits that the company pays on your behalf. The most common indirect benefit is the Employer's contribution to EPF (Employee Provident Fund) and Gratuity. These amounts are deducted from the CTC to arrive at your Gross Salary.
Standard Deductions
Once your Gross Salary is calculated, mandatory deductions are applied before you get your take-home pay:
- Employee EPF Contribution: Usually 12% of your Basic Salary.
- Professional Tax (PT): A state-level tax, typically around ₹200 per month depending on the state.
- TDS (Income Tax): Tax Deducted at Source based on your income tax slab under the old or new tax regime.
Use our free CTC to In-Hand Calculator to instantly decode your offer letter and find out exactly how much you will receive in your bank account at the end of the month!