CTC vs In-Hand Salary: What You Actually Take Home
Why a ₹6 LPA offer does not mean ₹50,000 a month. The parts of a CTC, what is deducted, and how to estimate your monthly in-hand pay.
6 min read · Updated November 2026
The short answer
CTC (cost to company) is everything the employer spends on you in a year, including money you never see in your bank account each month. In-hand salary is what is credited after deductions. For most salaried people in India the monthly in-hand is roughly 70–85% of CTC ÷ 12, depending on how the CTC is built and which tax regime you choose.
What sits inside a CTC
A typical offer letter splits CTC into: basic salary (often 40–50% of CTC), house rent allowance (HRA), special or flexible allowance, the employer’s provident fund (PF) contribution, gratuity, insurance premiums and variable or performance pay. Some companies also add meal cards, joining bonuses or retention bonuses into the headline number.
Money in the CTC that is not paid monthly
Employer PF: usually 12% of basic, sometimes capped at ₹1,800 a month because the statutory wage ceiling is ₹15,000. It goes to your EPF account, not your salary. Gratuity: many employers show about 4.81% of basic inside CTC. Under the Payment of Gratuity Act it is generally paid only after five years of continuous service. Variable pay: paid quarterly or yearly and depends on targets, so do not count all of it as monthly income. Insurance: group health cover premiums are a cost to the company, not cash to you.
What is deducted from your monthly pay
Employee PF: usually 12% of basic (or ₹1,800 if capped). Professional tax: a state tax of up to ₹2,500 a year; for example ₹200 a month in Karnataka or Maharashtra. Some states have none. Income tax (TDS): your employer deducts tax each month based on your expected yearly income, the tax regime you pick and any declarations you make.
A worked example
Take a CTC of ₹6,00,000 with basic of ₹24,000 a month, employer PF capped at ₹1,800, gratuity of about ₹1,154 a month shown in CTC, and no variable pay. Monthly gross = ₹50,000 − ₹1,800 − ₹1,154 ≈ ₹47,046. Subtract employee PF (₹1,800) and professional tax (₹200): about ₹45,046 before income tax. Your final in-hand depends on your tax regime and investments; check it with your HR team or the income tax department’s calculator.
Questions to ask before you accept
What is the fixed part and what is variable? Is PF calculated on full basic or capped? Is gratuity included in the CTC? When is variable pay paid and what decides it? Is there a joining bonus with a clawback if you leave early? Ask HR for a monthly salary breakup in writing.