Salary / CTC Breakdown Calculator

What does CTC (Cost to Company) actually mean?

CTC is the total amount your employer spends on you in a year — not what lands in your bank account. It bundles your take-home salary components (basic, HRA, special allowance) with money you don't receive monthly, like the employer's own PF contribution and gratuity, which is only paid out when you leave the company after 5+ years of service.

Why is my in-hand salary so much lower than my CTC?

Three things shrink it: (1) employer PF and gratuity are part of CTC but never hit your account monthly, (2) your own PF contribution is deducted from your gross pay before you receive it, and (3) income tax (TDS) is deducted at source. For a typical CTC, in-hand salary often lands around 70-75% of the CTC number, though this varies with your specific structure and tax situation.

What is HRA and why does it matter?

House Rent Allowance is a salary component meant to help cover rent. Under the Old Tax Regime, a portion of HRA can be tax-exempt if you pay rent and submit proof — calculated as the lowest of: actual HRA received, rent paid minus 10% of basic salary, or 50%/40% of basic (metro/non-metro). Under the New Regime (the default since FY 2023-24), this exemption isn't available at all, which is why this calculator doesn't reduce your taxable income for HRA.

What's the difference between Employee PF and Employer PF?

Both are usually 12% of basic salary, but they behave differently. Employee PF is deducted from your own salary (reducing your in-hand pay) and goes into your retirement account. Employer PF is paid by the company on top of your salary — it's part of your CTC but isn't money you ever see monthly; it also accumulates in your PF account for retirement.

Why is gratuity included in CTC if I might never receive it?

Gratuity is a legally mandated lump-sum benefit companies must pay employees who complete 5+ continuous years of service, calculated (in most cases) as roughly 4.81% of basic salary per year worked. Many companies include the accrued amount in your CTC even though you'd forfeit it entirely if you leave before 5 years — worth knowing when comparing offers.

How accurate is the 'Estimated Income Tax (TDS)' figure?

It's a reasonable estimate based on current FY 2025-26 slabs, assuming you claim only the standard deduction. It won't match your actual TDS exactly if you claim Section 80C investments, home loan interest, HRA exemption (Old Regime only), or other deductions — those would lower your real tax and raise your real in-hand pay.

Should I negotiate for a higher basic salary or higher CTC?

A higher basic salary increases your PF contribution (both yours and the employer's) and your gratuity accrual — good for long-term retirement savings, but it also slightly reduces immediate take-home pay since more goes to PF. Total CTC matters most for comparing offers, but if two offers have the same CTC, check how much is basic + HRA (received monthly) vs. variable pay or benefits (not guaranteed or not liquid).

Does this calculator account for other common deductions like health insurance premiums?

No — many companies also deduct employee contributions to group health insurance, meal cards, or other benefits from gross pay, which would lower actual in-hand pay slightly further. This calculator models the core statutory components (PF, professional tax, income tax) that apply almost universally.

Why does variable pay show up separately from the fixed components?

Variable pay (performance bonus, sales incentives) usually isn't guaranteed every month and is often paid quarterly or annually based on performance — unlike basic, HRA, and special allowance, which are fixed and paid every month regardless of performance. It's still taxed as part of your income in the year you receive it.

Why do professional tax amounts vary so much between states?

Professional tax is levied by individual Indian states (not the central government), so both the rate and whether it exists at all vary — for example, Maharashtra and Karnataka charge it, while several other states don't. The default here (₹2,400/year, i.e. ₹200/month) matches common state slabs, but check your specific state's rules for an exact figure.