Quick Facts

Understanding Your CTC vs In-Hand Salary in India

CTC (Cost to Company) is the total amount a company spends on an employee annually - it includes your basic salary, HRA, allowances, PF contributions, gratuity, and other benefits. Your in-hand or take-home salary is significantly lower than your CTC because of deductions like Employee PF (12% of basic), professional tax, TDS, and ESI. Understanding this difference helps you negotiate better and plan your finances accurately.

A typical CTC breakdown in India: Basic Salary (40-50% of CTC), HRA (40-50% of basic for metro cities), Special Allowance (balancing component), Employer PF (12% of basic), Gratuity (4.81% of basic), and other benefits. The difference between CTC and in-hand can be 20-35% depending on your tax bracket and employer structure.

How HRA Exemption Works

HRA (House Rent Allowance) is one of the biggest tax-saving components for salaried employees. Under Section 10(13A) of the Income Tax Act read with Rule 279 of the new Income Tax Rules 2026, the exemption is the lowest of: actual HRA received, 50% of basic salary (metro) or 40% (non-metro), and actual rent paid minus 10% of basic salary.

Big update from 1 April 2026: CBDT's Income-tax Rules, 2026 (notified 20 March 2026, e-Gazette) expanded the HRA metro list from 4 to 8 cities. The original 4 (Delhi, Mumbai, Kolkata, Chennai) are now joined by Bengaluru, Hyderabad, Pune, and Ahmedabad - all 8 cities qualify for the 50% cap. This is the first metro-list update in decades and a meaningful tax saving for salaried renters in the four newly added cities. Important: for FY 2025-26 ITR (returns filed by 31 July 2026 covering income earned 1 April 2025 to 31 March 2026), the OLD 4-city rule still applies. The 8-city rule only applies to income earned from 1 April 2026 onwards (FY 2026-27).

When you select Old Regime above and enter your monthly rent paid plus city, this calculator applies the exemption automatically using the current FY 2026-27 8-city list. The new regime forfeits HRA exemption in exchange for the higher Rs 75,000 standard deduction and the Rs 60,000 rebate up to Rs 12L taxable income. Under the new regime, the calculator also applies marginal relief between Rs 12L and roughly Rs 12.7L taxable income, so a small jump above the rebate threshold does not trigger a sudden Rs 62,000 tax liability.

How to Calculate CTC from Basic Salary

There is no single formula because CTC is an output of company policy, not a fixed calculation from basic salary. Most Indian employers work the other way around: they start from your offered CTC and then allocate components based on a template. A typical approach is: set Basic Salary at 35-50% of CTC, set HRA at 50% of Basic for metro cities (40% for non-metro), add a fixed Employer PF equal to 12% of Basic, add Gratuity at 4.81% of Basic, add optional heads like LTA and meal allowance, and put the balance into Special Allowance.

If you only know your Basic and want to estimate the CTC it usually sits inside, assume Basic is around 40% of CTC and multiply by 2.5 as a rough starting point. Actual CTC can be lower in startup structures (higher basic, fewer allowances) or higher in government rolls (NPS + DA components). Use the presets above to see typical allocations for each structure.

Going independent? Use our Freelance Rate Calculator to convert this CTC into the freelance hourly rate you must charge to maintain the same in-hand. It factors EPF matching, gratuity accrual, paid leave / unpaid downtime, group health and term life insurance, professional tax, CA fees, and the loss of the Section 16 standard deduction.

Fresh graduate planning to apply for jobs? Most Indian employers and campus-placement portals ask for percentage, not CGPA. Convert your university CGPA to the equivalent percentage with our CGPA to Percentage Calculator first - it carries official formulas for selected Indian boards and universities including CBSE Class IX/X, VTU, Anna University, KTU, JNTU campuses, and MAKAUT, plus a weighted CGPA mini calculator if you only have semester grades and credits.

CTC Distribution and Breakup: Standard 10 LPA Package

The CTC distribution below shows how a Rs 10 lakh package splits across fixed components (Basic, HRA, allowances) and statutory contributions (Employer PF) under the Standard IT preset, using the same math the calculator above uses (single source of truth via computeSalaryBreakup()).

Gratuity is accrued separately at 4.81% of Basic (around Rs 16,835/year, or Rs 1,403/month accrued) under the Payment of Gratuity Act 1972 and paid on exit. It is part of total CTC concept in many employer offer letters, but it does not reduce monthly in-hand and is shown here for reference only.

Deductions from gross pay (under new tax regime, FY 2025-26 and FY 2026-27 - slabs unchanged): Employee PF mirrors Employer PF at the same Rs 15,000 wage cap; Professional Tax varies by state (Rs 0 to Rs 2,500/year per Article 276); Income Tax is Rs 0 at Rs 10 LPA because taxable income (gross minus Rs 75,000 standard deduction) falls under the Rs 12 lakh threshold where the Section 87A rebate of up to Rs 60,000 fully offsets tax.

For the exact monthly in-hand at Rs 10 LPA and other CTC brackets under both New and Old Regime, see the In-Hand Salary Examples by CTC table below -figures are computed from the same calculator math model with state-agnostic defaults. For a step-by-step income tax calculation at any salary level under both regimes, our Income Tax Calculator shows the side-by-side computation with all 80C, 80D, HRA, and home loan interest deductions applied, including Section 87A rebate and marginal relief math. If you have an old LIC policy you are considering surrendering as part of a salary-vs-investment review, our LIC Surrender Value Calculator shows the IRDAI GSV floor estimate plus the 80C reversal / 10(10D) / 194DA tax flag implications.

In-Hand Salary Examples by CTC: 3 LPA to 2 Cr

Typical monthly in-hand salary figures for common CTC brackets in India, computed using the SAME New Regime and Old Regime math the calculator above uses (same pure function under the hood, no separate model). Numbers assume the Standard IT preset (Basic 35% of CTC, HRA 50% of Basic for metro, LTA Rs 40,000/year, Meal Rs 26,400/year, Employer PF 12% capped per EPF Act, no NPS), no HRA exemption claimed (run the calculator above for state-specific PT and HRA exemption), and 80C maxed at Rs 1,50,000 in the Old Regime. State Professional Tax uses Karnataka Rs 2,400/year for deterministic display.

Worked example - Rs 2 Cr CTC (Standard IT preset): Basic Rs 70,00,000 (35% of CTC), HRA Rs 35,00,000 (50% of Basic for metro), LTA Rs 40,000, Meal Rs 26,400, Special Allowance Rs 94,12,000 (balancing component), Employer PF Rs 21,600 (12% of Basic capped at Rs 15,000 monthly wage per the EPF Act). Gratuity is accrued separately at 4.81% of Basic (around Rs 3,36,700) under the Payment of Gratuity Act 1972 and paid on exit, so it does not reduce monthly in-hand. Under the New Regime, taxable income after the Rs 75,000 standard deduction is Rs 1,99,03,400, which falls in the Rs 1 Cr - Rs 2 Cr taxable tier -so surcharge applies at 15% (not the higher 25% tier that only kicks in above Rs 2 Cr taxable income), plus 4% Health and Education cess on tax + surcharge. Monthly in-hand works out to about Rs 11,09,615. The Old Regime is broadly comparable at this income because high-CTC slabs hit the 30% bracket either way, but the surcharge marginal-relief math differs - use the calculator above with your actual rent and 80C to compare.

Monthly CTC to In-Hand: 20K to 1L Per Month

If your offer letter or pay structure quotes monthly CTC instead of annual, here are typical in-hand figures for common monthly CTC brackets, using the same Standard IT preset assumptions as the LPA bracket table above.

Notes: figures above use the Standard IT preset (Basic 35% of CTC, HRA 50% of Basic for metro, LTA Rs 40,000/year, Meal Rs 26,400/year, Employer PF 12% capped per EPF Act, no NPS), no HRA exemption claimed, Karnataka Professional Tax Rs 2,400/year, and 80C maxed at Rs 1,50,000 for the Old Regime. Gratuity (4.81% of Basic) is accrued separately under the Payment of Gratuity Act and paid on exit, so it does not affect monthly in-hand. Your actual in-hand depends on your state (PT varies Rs 0 to Rs 2,500/year), HRA exemption (run the calculator with rent + city), and additional 80C / 80D / NPS / home loan deductions for the Old Regime.

Sources & References

• Income Tax Department of India (slabs, deductions, Section 87A rebate, Section 10(13A) HRA, surcharge)
• Income Tax Act 2025 - re-codification effective 1 April 2026; substantively re-codifies the 1961 Act including Section 115BAC new-regime rules and slabs unchanged; specific renumbered section numbers in the 2025 Act not asserted here without primary-source verification
• Income-tax Rules, 2026 - notified by CBDT on 20 March 2026 (e-Gazette), effective 1 April 2026. Rule 279 expands the HRA metro city list from 4 to 8: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad. First metro-list update in decades.
• Finance Act 2025 - Rs 60,000 rebate threshold raised to Rs 12 lakh taxable income, marginal relief introduced for incomes just above the rebate threshold
• Constitution of India, Article 276 - caps state-levied Professional Tax at Rs 2,500 per year per person
• Employees' Provident Fund Organisation (EPFO) - 12% employee + 12% employer PF, computed on Rs 15,000/month basic wage cap
• Employees' Provident Funds and Miscellaneous Provisions Act 1952
• Payment of Gratuity Act 1972 (4.81% gratuity calculation: 15/26 of monthly basic per year)
• State-specific Profession Tax Acts (example: Maharashtra State Tax on Professions, Trades, Callings and Employments Act 1975); states without PT include Delhi, UP, Haryana, Punjab, Rajasthan, Uttarakhand, Himachal Pradesh, Goa, Arunachal Pradesh, Chandigarh.

Last reviewed against Income Tax Act 2025, Finance Act 2025, and Budget 2026-27 in May 2026. Tax slabs unchanged from FY 2025-26 to FY 2026-27. HRA exemption applied only under Old Regime when rent and city type are entered. Surcharge applied above Rs 50L taxable with marginal relief at each threshold.