Salary & HR
CTC vs take-home salary
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: compare the new and old regime on your own income in the income tax calculator. Run your own figures in the CTC calculator and the 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 |
Employee and employer PF are the two lines most people never look into further. See provident fund explained for how that 12% actually splits, what your UAN is for, and the rule that decides whether a withdrawal is taxed.
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.