Free payroll tool
CTC to in-hand salary calculator
Turn an annual CTC into monthly in-hand salary. Set basic and HRA percentages, choose how employer PF and gratuity sit inside CTC, and compare take-home under the new and old tax regimes.
How CTC turns into in-hand salary
CTC (cost to company) is what an employer spends on an employee in a year. Employer PF, the gratuity provision and variable pay are inside CTC but outside the monthly salary.
What remains is fixed gross salary, with special allowance as the balancing figure. Employee PF, professional tax and TDS come out of it, leaving in-hand pay.
The 4.81% comes from the gratuity formula of 15 days' wages per year of service on a 26-day month. That is 15 ÷ 26 of a month's basic, or about 4.81% of annual basic. Gratuity is paid only after five years of continuous service (one year for fixed-term employees under the Code on Social Security); the gratuity calculator shows the actual payout.
Worked example
Worked example: the calculator's default figures
CTC ₹12,00,000 with ₹60,000 variable pay, basic 50% of CTC, HRA 50% of basic, employer PF on the ₹15,000 cap, gratuity inside CTC and ₹200 professional tax.
- Basic = ₹6,00,000 (₹50,000 a month). HRA = ₹3,00,000 (₹25,000 a month).
- Employer PF = 12% × ₹15,000 = ₹1,800 a month, or ₹21,600 a year.
- Gratuity = 4.81% × ₹6,00,000 = ₹28,860.
- Special allowance = ₹12,00,000 − ₹60,000 − ₹6,00,000 − ₹3,00,000 − ₹21,600 − ₹28,860 = ₹1,89,540 (₹15,795 a month).
- Monthly gross = ₹50,000 + ₹25,000 + ₹15,795 = ₹90,795.
New regime: taxable income = ₹10,89,540 + ₹60,000 − ₹75,000 = ₹10,74,540. Slab tax of ₹47,454 is fully cancelled by the rebate, so TDS is nil. In-hand = ₹90,795 − ₹1,800 PF − ₹200 PT = ₹88,795.
Old regime: taxable income = ₹11,49,540 − ₹1,20,000 HRA exemption − ₹50,000 standard deduction − ₹2,400 PT − ₹1,50,000 (80C) − ₹25,000 (80D) = ₹8,02,140. Tax = ₹72,928 + ₹2,917 cess = ₹75,845, or ₹6,320 a month. In-hand = ₹82,475.
Here the new regime leaves ₹6,320 more each month.
The choices that change in-hand pay
Basic percentage
Raising basic moves money from special allowance into basic and HRA. With PF on the ₹15,000 cap, gross dips slightly as the gratuity provision grows. With PF on full basic, both PF shares rise, so in-hand pay falls while retirement savings grow.
Keep the Code on Wages in mind. If excluded allowances exceed 50% of total pay, the excess counts as wages for PF and gratuity. The codes are in force but rules are still being notified, so check before cutting basic well below half of pay.
HRA and the HRA exemption
The HRA percentage sets how much HRA is paid. The tax exemption is separate and applies only under the old regime. It is the lowest of the actual HRA received, rent paid minus 10% of basic + DA, and 50% of basic + DA for metro cities or 40% elsewhere. Under the 1961 Act the metro cities were Delhi, Mumbai, Kolkata and Chennai; confirm the current list under the new Act's rules. Enter the exemption you have worked out.
Tax regime
Tax uses the slabs announced in Budget 2025. The new regime allows only the ₹75,000 standard deduction here. The old regime allows ₹50,000 plus the deductions you enter. The rebate (Section 87A of the 1961 Act, renumbered by the Income-tax Act, 2025) and 4% cess apply in both. For a fuller comparison with home-loan interest and NPS, use the salary TDS calculator or read old vs new tax regime.
What is and isn't included
- Included: ESI when monthly fixed pay is ₹21,000 or less, with employer ESI carved out of CTC.
- Included: surcharge with marginal relief above ₹50 lakh.
- Not included: EDLI and PF admin charges, insurance, meal cards, reimbursements, employer NPS and state-wise professional tax slabs.
- TDS is spread evenly over twelve months. In practice many employers deduct extra tax in the month the bonus is paid.
Once a structure is agreed, salary structures in Swastik Payroll hold basic, HRA and allowances as fixed or percentage components, with every revision saved as a new version.
Frequently asked questions
Why is in-hand salary so much lower than CTC divided by 12?
CTC ÷ 12 on ₹12 lakh is ₹1,00,000, but the example shows ₹88,795 in hand. Variable pay, employer PF and gratuity are inside CTC but not in monthly pay, and employee PF and professional tax come out of gross salary.
Are employer PF and gratuity part of my salary?
They are part of CTC, not monthly salary. Employer PF goes into your PF and pension accounts. Gratuity is paid when you leave after qualifying service. Neither appears as an earning on the monthly payslip. See CTC vs gross vs net salary.
Is variable pay guaranteed?
Usually not. It depends on your offer letter and targets. It is taxed in the year it is paid, which is why the calculator includes it in annual tax but leaves it out of monthly pay.
Which tax regime should I choose?
Compare both with your real deductions. On the default figures the new regime is lower, because the rebate removes all tax at this income. The old regime tends to help only when HRA exemption, 80C, 80D and home-loan interest together are large.
What if my employer does not include PF in CTC?
Some employers pay employer PF on top of CTC. If so, choose "No PF" here to split CTC, then deduct the employee's PF yourself, or use the salary calculator with the monthly components.
Results are estimates for planning. Statutory rates, ceilings and tax rules change; check the current notifications or consult your CA before using a figure for payroll or tax filing.
Related tools and guides
Salary Calculator
Gross salary to take-home pay.
Salary TDS Calculator
Monthly TDS under both regimes.
Gratuity Calculator
Gratuity from basic + DA and service.
PF Calculator
EPF, EPS and EDLI split per month.
CTC vs Gross vs Net Salary
What each number includes.
Payroll Software
Monthly salary runs from attendance to payslip.
Stop calculating payroll by hand
Swastik Payroll applies these rules to every employee automatically, straight from attendance, and produces payslips and PF/ESIC files.