CTC vs In-Hand Salary: Why Your Take-Home Is Lower (FY 2026-27)

Cost to Company is everything your employer spends on you in a year. Only part of it is paid as salary:

• Basic salary, often 40–50% of CTC. PF, gratuity and the HRA limit are all calculated on it.
• HRA and special allowance: the rest of your monthly salary.
• Employer PF: 12% of basic, paid into your EPF account, not your bank account. Many employers cap it at 12% of ₹15,000 a month (₹1,800).
• Gratuity: often budgeted at 4.81% of basic (15 days' pay for each year of service), but paid only when you leave after at least five years.
• Variable pay or bonus, which may not be paid in full.

• Employee PF: another 12% of basic (or of the capped ₹15,000), matching the employer's share.
• Professional tax: up to ₹2,500 a year depending on your state. See the state-wise slabs.
• Income tax (TDS) under Section 392 (earlier 192), spread across the year by your employer. In the new regime there is no tax on taxable income up to ₹12 lakh.

Assumes basic = 40% of CTC, professional tax ₹2,500/year, new regime. Gratuity is included in CTC and the employer pays PF on the full basic.

With PF limited to the ₹15,000 wage ceiling, the same CTCs give a monthly in-hand of ₹61,576 (₹8,00,000), ₹94,268 (₹12,00,000), ₹1,31,714 (₹18,00,000), ₹1,75,485 (₹25,00,000). Less goes to PF, so more is paid as salary, but more of it is also taxed.

• Ask for the fixed and variable split, and whether PF is on full basic or capped.
• Compare offers on monthly in-hand, not CTC. Two ₹18 lakh offers can differ by thousands a month.
• Employer NPS contributions of up to 14% of salary are deductible even in the new regime under Section 124(2), so moving part of CTC into NPS can raise your after-tax pay.

Put your own numbers into the CTC to in-hand salary calculator, or compare two offers side by side in the job offer comparator.