Salary & HR
CTC vs take-home salary
6 min read
CTC — cost to company — is what your employer spends on you in a year. Take-home is what lands in your bank account each month. The gap between them is not a trick; it is retirement contributions, statutory deductions and tax.
Below is the structure from CTC down to net pay, with a worked example so both employers and candidates can see where each rupee goes.
From CTC to net pay
Gross salary = CTC − Employer PF − Gratuity − Other employer-borne benefits
Take-home = Gross salary − Employee PF − Professional tax − Income tax (TDS)
Employer PF and gratuity are yours, but they are deferred — they go into retirement accounts, not this month's salary.
Worked example on ₹12,00,000 CTC
| Component | Annual | Monthly |
|---|---|---|
| CTC | ₹12,00,000 | ₹1,00,000 |
| Less: employer PF | ₹43,200 | ₹3,600 |
| Less: gratuity provision | ₹34,600 | ₹2,883 |
| Gross salary | ₹11,22,200 | ₹93,517 |
| Less: employee PF | ₹43,200 | ₹3,600 |
| Less: professional tax | ₹2,500 | ₹208 |
| Less: income tax (TDS) | Depends on regime and exemptions | — |
| Take-home (before tax) | ₹10,76,500 | ₹89,709 |
Income tax varies with your regime choice, deductions and exemptions, so it is left as a variable here. Run your own figures in the CTC calculator and the take-home salary calculator.
Components you will see on a payslip
| Component | What it is | Reaches your account? |
|---|---|---|
| Basic salary | Core fixed pay; drives PF and gratuity | Yes |
| HRA | House rent allowance | Yes |
| Special allowance | Balancing figure in the structure | Yes |
| Employee PF | Your 12% contribution, deducted | No — goes to PF |
| Employer PF | Employer's matching contribution | No — goes to PF |
| Gratuity | Provision payable on qualifying exit | Not monthly |
| Professional tax | State-level deduction, where applicable | No |
| Variable pay / bonus | Performance-linked, often annual | When paid |
If you are the employer
Quote CTC and in-hand separately in your offer letter. Candidates compare in-hand figures, and a clear breakdown prevents a difficult conversation in month one.
- Build monthly payroll figures with the salary calculator.
- Add shift or extra hours accurately using the overtime calculator.
- PF, professional tax rates and gratuity rules depend on statute, state and headcount — confirm your obligations before finalising a structure.