From CTC to in-hand, step by step
- Take out what the employer pays on your behalf: its 12% PF contribution and gratuity (4.81% of basic, if your CTC includes it). This gives your gross salary.
- Take out variable pay if it is paid as a yearly bonus rather than monthly.
- Deduct your own PF: 12% of basic (or ₹1,800 a month if the company caps PF wages at ₹15,000).
- Deduct professional tax: up to ₹2,500 a year, depending on the state. Rajasthan, Delhi, Uttar Pradesh and Haryana do not levy it.
- Deduct income tax (TDS), which your employer spreads evenly over the year.
For a 12 LPA CTC with basic at 50%, that leaves about ₹85,395 a month in the new regime.
Why basic pay is moving to 50%
The labour codes in force since 21 November 2025 define “wages” so that allowances above 50% of total pay are added back. Many companies are raising basic pay to 50% of CTC. That raises PF and gratuity (good for long-term savings) and can lower monthly take-home slightly.
Ways to increase take-home
- Ask for employer NPS: up to 14% of basic is deductible even in the new regime.
- Choose the old regime only if HRA, home loan interest and 80C together are large; compare in the income tax calculator.
- Reimbursements such as phone, internet or fuel bills, if your company offers them, are tax-free against bills.
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Questions people ask
Is employer PF part of my in-hand salary?
No. It goes to your EPF account. It is still your money: it earns 8.25% (2025-26) and is tax-free on withdrawal after 5 years of service.
Why is my first month’s salary different?
Joining mid-month, arrears, and TDS that is recalculated after you declare investments all change individual months. The calculator shows the steady monthly figure.