How CTC becomes in-hand pay
Your CTC, or cost to company, is everything an employer spends on you in a year. Only part of it is paid to you each month. Working out your in-hand pay takes three steps:
- Remove what the employer pays but you never receive monthly: their PF contribution, the gratuity provision, and benefits like insurance.
- Set aside variable pay: bonuses and performance pay arrive only if targets are met, usually once or a few times a year.
- Take out the deductions: income tax, your own PF contribution and, in most states, professional tax. What’s left is your in-hand pay.
A worked example
Take a ₹12 lakh CTC in Bengaluru, with PF on the wage ceiling and gratuity in the CTC. SalaryIQ estimates basic pay at about half of fixed pay, so gross pay comes to about ₹94,723 a month. Your PF is ₹3,000 a month, Karnataka’s professional tax is ₹200 a month (₹300 in February), and income tax is nil, because the salary is under the ₹12.75 lakh tax-free limit. That leaves about ₹91,515 a month in hand.
CTC, gross salary and net salary
- CTC is the full annual cost: gross salary, plus the employer’s PF share, gratuity, variable pay and any benefits.
- Gross salary is your cash pay before deductions: basic pay, HRA and allowances.
- Net salary, or in-hand pay, is what reaches your bank account after deductions.
Since the Labour Codes took effect in November 2025, the wages used for PF must make up at least half of total pay, so many employers now set basic pay at around 50% of gross. Your offer letter has the exact structure; enter it under Advanced options for a precise figure.
Common salary deductions
- Income tax (TDS): deducted monthly by your employer against your estimated annual tax. In tax year 2026-27 the new regime taxes income above ₹4 lakh at rising rates from 5% to 30%, with a full rebate up to ₹12 lakh of total income and a ₹75,000 standard deduction for salary.
- Provident fund: 12% of PF wages from you, matched by your employer, on wages up to ₹25,000 a month (or more if your employer contributes on full basic). It’s savings, not a cost.
- Professional tax: a state tax of up to ₹2,500 a year. Rates and limits vary by state, and some states don’t charge it.
- ESI: if your pay is low enough to be covered by Employees’ State Insurance, a small share is deducted too. SalaryIQ flags this but doesn’t calculate it.
How the offer comparison works
Compare Job Offers runs your current salary and the new offer through the same engine as Check My Salary, so each side shows exactly what that tab would. It then sets the CTC hike against the change in guaranteed take-home pay. The two often differ: a bigger share of variable pay, a higher tax slab, or a larger PF and gratuity share can all mean a 30% CTC hike is a much smaller rise in what you can spend.
Treat variable pay as possible, not promised. If you’d struggle without it, compare the guaranteed monthly figure first.
Frequently asked questions
How is in-hand salary calculated from CTC?
Start with your CTC and take out what your employer pays but never puts in your account: their PF contribution, the gratuity provision and any other benefits. Set aside variable pay, which is paid only if targets are met. What remains is your gross pay. Take income tax, your own PF and professional tax out of that, and you have your in-hand pay.
What is the difference between CTC, gross salary and net salary?
CTC is everything the employer spends on you in a year. Gross salary is the cash pay before deductions: basic, HRA and allowances. Net salary, or in-hand pay, is what reaches your bank account after income tax, PF and professional tax.
Do I pay income tax on a ₹12 lakh salary in tax year 2026-27?
Not in the new regime. A resident individual whose total income is ₹12 lakh or less gets a rebate of up to ₹60,000, which covers the whole tax. Salaried employees also get a ₹75,000 standard deduction, so a salary of up to ₹12.75 lakh is tax-free. Just above ₹12 lakh of total income, marginal relief keeps your tax from exceeding the income above ₹12 lakh.
Is PF deducted on my full basic pay?
By law, PF is 12% of your PF wages up to the wage ceiling: ₹25,000 a month from 17 September 2026, ₹15,000 before that. Many employers contribute on your full basic pay instead, which lowers your in-hand pay but raises your savings. SalaryIQ lets you choose either, or no PF.
Which tax regime should I choose?
The new regime is the default and usually wins unless you have large deductions. The old regime can come out ahead if you claim HRA on a high rent, the full section 80C amount, home-loan interest or similar. SalaryIQ shows your in-hand pay under the other regime too, using the deductions you enter.
Why is my monthly tax deduction different from the tax shown here?
SalaryIQ shows your estimated tax for the whole year, spread evenly over 12 months. Your employer deducts tax at source each month based on your projected income and the declarations you submit, so individual months can differ, especially after a raise, a bonus or a mid-year change.
Is gratuity in my CTC paid every month?
No. Gratuity is paid when you leave a job after the qualifying service. Employers that include it in CTC set aside about 4.81% of basic pay a year for it, which is why it never shows up in your monthly pay.
Which states' professional tax does SalaryIQ calculate?
Assam, Gujarat, Karnataka, Maharashtra, Telangana, from each state's official schedule. Some states don't charge professional tax and some set it locally, so for any other state you enter the amount from your payslip. It can't exceed ₹2,500 a year.
Does SalaryIQ store or share my salary?
No. Every calculation runs in your browser. Nothing you type is saved, sent to Jobra's servers or shared with anyone, and the PDF is built on your device.
Rules and official sources
SalaryIQ’s rules are stored as versioned settings, each checked against the official source on 10 October 2026. It estimates only what you leave blank, and says so in every result.
- Income-tax Act, 2025, as amended by the Finance Act, 2026 (Income Tax Department)Sections 19 (standard deduction, professional tax), 22(2), 123 and Schedule XV, 124, 156 (rebate), 202 (new regime) and 516 (rounding)
- Memorandum explaining the Finance Bill, 2026 (Union Budget 2026-27)Slab rates, surcharge and 4% cess for tax year 2026-27 and assessment year 2026-27, unchanged
- Income-tax Rules, 2026, rule 279 (Income Tax Department)HRA exemption: 50% of salary in eight cities, 40% elsewhere
- Employees' Provident Fund Scheme, 2026, G.S.R. 525(E), Gazette of India12% employer and equal employee contribution, limited to the wage ceiling, rounded to the rupee
- S.O. 5109(E), Ministry of Labour and Employment, 17 September 2026₹25,000 a month EPF wage ceiling from 17 September 2026
- Code on Social Security, 2020 (India Code)Definition of wages (including the 50% rule) and PF contributions
- Assam Professions, Trades, Callings and Employments Taxation: rate schedule (Assam Tax Department)Salary slabs: nil to ₹10,000, ₹150, ₹180, ₹208 a month
- Rate of Profession Tax, Gujarat State Tax on Professions Act, 1976 (Commercial Tax Department)Nil up to ₹12,000 a month, ₹200 a month above
- Professional Tax FAQ, Commercial Taxes Department, Karnataka (Notification DPAL 08 SHASANA 2025)Nil below ₹25,000 a month; ₹200 a month and ₹300 in February
- Rate schedules under the Profession Tax Act, 1975, as on 31.03.2025 (Maharashtra GST Department)Separate slabs for men and women; ₹2,500 a year above the threshold
- Telangana Tax on Professions Act, 1987: First Schedule (Commercial Taxes Department)Nil up to ₹15,000, ₹150 up to ₹20,000, ₹200 a month above
SalaryIQ gives an estimate for planning, not tax or legal advice.