Why take-home is less than CTC
Cost to Company (CTC) is everything your employer spends on you in a year, not what you receive. Several parts never reach your bank account every month: your employer's PF contribution, gratuity set aside for later, and sometimes insurance premiums. Then your own PF contribution, professional tax and income tax come out of your gross salary.
Gross salary = CTC − employer PF − gratuity
Take-home = gross − employee PF − professional tax − income taxWorked example
The 50% wage rule
India's labour codes, in force from 21 November 2025, define "wages" so that basic pay plus DA should be at least half of total remuneration. For many employees this raises the basic salary. That in turn increases PF contributions and gratuity, and slightly reduces monthly take-home pay, while growing long-term savings.
PF: capped or on full basic?
PF is compulsory on wages up to ₹15,000 a month, so many employers contribute on that capped amount (₹1,800 a month each). Others contribute 12% of the full basic salary. A higher PF means lower take-home now but more tax-free savings later. Some companies also let you choose. See the long-term impact on the EPF calculator.
Other things that can change your in-hand pay
- Variable pay and bonuses are often part of CTC but paid once a year, and only if targets are met.
- Meal cards, fuel and phone reimbursements can reduce tax under the old regime.
- Employer NPS is deductible in both regimes and can lower your tax.
- Professional tax depends on your state and is capped at ₹2,500 a year.
For a detailed tax comparison with all your deductions, use the income tax calculator.
Frequently asked questions
How much is in-hand salary for a 12 LPA CTC?
With typical assumptions (50% basic, capped PF, gratuity in CTC, new regime) it's roughly ₹90,000–95,000 a month. The exact figure depends on your salary structure; enter your own numbers above.
Is employer PF part of my salary?
It's part of your CTC but goes straight to your EPF account, so it isn't in your monthly pay.
Does the new regime allow professional tax deduction?
No. Professional tax is deductible only under the old regime, though it's still deducted from your pay.
Official references: Income Tax Department · EPFO