Salary Calculator Guide: CTC vs Take-Home Pay Explained
Your CTC and your actual bank credit are very different numbers. Understanding the deductions between them helps you plan your finances accurately.
CTC to Take-Home: What Gets Deducted
Example: ₹10L CTC Breakdown
Frequently Asked Questions
What is the difference between CTC and take-home salary?
CTC (Cost to Company) is the total amount an employer spends on an employee, including salary, PF contribution, gratuity provision, and benefits. Take-home salary (net salary) is what you actually receive after deducting employee PF, professional tax, income tax (TDS), and other deductions — typically 65–80% of CTC.
How is PF (Provident Fund) calculated?
Employee contributes 12% of basic salary to EPF. Employer also contributes 12%, of which 3.67% goes to EPF and 8.33% to EPS (Employee Pension Scheme). Only the employee's 12% is deducted from your salary; the employer's share is an additional cost in CTC.
What is professional tax?
Professional tax is a state-level tax on employment income. Most states cap it at ₹2,500 per year (₹200/month). It is deducted from salary and partly offsets your income tax liability. States without professional tax include Rajasthan, Haryana, UP, and Delhi.
What is HRA exemption?
HRA (House Rent Allowance) exemption reduces taxable income. Exempt amount = minimum of: (1) HRA received, (2) Rent paid minus 10% of basic salary, (3) 50% of basic salary (metro) or 40% (non-metro). You need rent receipts to claim HRA.
Is gratuity part of CTC?
Gratuity provision is included in CTC by many employers, though it is payable only after 5 years of continuous service. Gratuity = (15 × last drawn basic salary × years of service) ÷ 26. The maximum tax-free gratuity is ₹20 lakhs.
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