How is in-hand salary calculated from CTC in India 2026-27?

In-hand salary = CTC minus all deductions. Key deductions: (1) Employee PF contribution: 12% of basic salary. (2) Professional Tax: ₹200/month in most states. (3) Income Tax (TDS): based on tax regime, income slab, and declared deductions. (4) Employee ESIC: 0.75% of gross if salary below ₹21,000/month. Example: ₹10L CTC with 40% basic (₹4L basic), 20% slab, new regime: EPF = ₹48,000/year, Tax TDS ~₹52,000/year, PT = ₹2,400/year. In-hand ≈ ₹10L − ₹1.02L = ₹8.98L/year or ₹74,833/month.

What is the difference between CTC and in-hand salary in India?

CTC (Cost to Company) is the total annual expense an employer incurs for an employee — including direct salary, employer PF contribution (12% of basic), employer ESIC (if applicable), gratuity provision, and any other benefits. In-hand (take-home) salary is what actually gets credited to your bank account after deducting employee PF (12% of basic), income tax (TDS), professional tax, and ESIC. Typically, in-hand salary is 70-80% of CTC for mid-level salaried employees.

How does new tax regime affect in-hand salary in 2026?

Under the New Tax Regime for FY 2025-26: standard deduction of ₹75,000 applies, and taxable income is gross salary minus ₹75,000 minus employer NPS (80CCD2). No 80C, HRA, or 80D deductions. For income up to ₹12.75L (₹12L taxable after ₹75K standard deduction), tax = ₹0 due to 87A rebate. This significantly increases in-hand salary vs old regime for most employees below ₹15L CTC. Example: ₹12L CTC employee saves ₹46,800+ in TDS under new regime vs old regime.

What is the EPF contribution from salary?

Employee EPF contribution is 12% of basic salary + dearness allowance. Employer also contributes 12%, but split: 8.33% to EPS (Employee Pension Scheme, capped at ₹1,250/month) and 3.67% to EPF. For a basic salary of ₹30,000/month: Employee EPF = ₹3,600/month = ₹43,200/year. This reduces in-hand salary but builds a retirement corpus earning 8.25% p.a. tax-free. For basic above ₹15,000, EPF is calculated on actual basic (not capped at ₹15,000 unless company opts for capped contribution).

What is HRA in salary and how is it calculated?

HRA (House Rent Allowance) is a salary component typically 40-50% of basic salary. For tax purposes under the Old Regime, HRA exemption = minimum of: (a) Actual HRA received, (b) Rent paid minus 10% of basic, or (c) 50% of basic (metro) or 40% of basic (non-metro). If you don't pay rent, HRA is fully taxable. Under New Tax Regime, HRA exemption is not available — the entire HRA component is taxable. For rent above ₹1L/year, you must provide landlord's PAN to claim exemption.

What is professional tax and who pays it?

Professional Tax (PT) is a state-level tax deducted from salary. It is NOT applicable in all states — only states like Maharashtra, Karnataka, West Bengal, Andhra Pradesh, Tamil Nadu, Telangana, Gujarat, and a few others levy it. Maximum PT is ₹2,500 per year (₹200/month in most states). Maharashtra PT: ₹200/month for salary above ₹10,000. PT is deductible under Section 16(iii) of Income Tax Act — so it reduces your taxable income. Delhi, UP, Rajasthan, and most northern states do NOT have professional tax.

How to increase in-hand salary without changing CTC?

Strategies to increase in-hand salary without changing CTC: (1) Switch to New Tax Regime if income is below ₹15L and deductions are low — saves up to ₹46,800 in TDS. (2) Restructure CTC to include employer NPS (80CCD2 at 14% of basic) — reduces taxable income in both regimes. (3) Maximise tax-free components: LTA (2 journeys per 4-year block), meal vouchers (₹50/day tax-free), mobile/internet reimbursement (₹12,000-24,000/year). (4) Claim all eligible deductions under 80C, 80D, HRA in old regime. (5) Request flexible benefit plan (FBP) from employer to optimise tax-free allowances.

What is gratuity and is it included in CTC?

Gratuity is a retirement benefit paid after 5 years of continuous service. It is often included in CTC calculations: Gratuity provision = (Basic Salary / 26) × 15 days × years of service. Annual gratuity component in CTC = Basic Salary × 15 / 26 = approximately 4.81% of basic salary. Important: Gratuity is NOT paid monthly — it's paid only after 5 years of service. So CTC includes a gratuity provision that you don't receive in your monthly salary. Gratuity up to ₹20 lakh is completely tax-free.

Salary Calculator India 2026-27 — CTC to In-Hand Salary After Tax & PF

Calculate your exact in-hand take-home salary from CTC after EPF deduction, income tax (TDS), professional tax, and all components. Compare old vs new tax regime impact on monthly salary.

📌 FY 2025-26 (AY 2026-27) Slabs ✅ New Regime: Zero Tax up to ₹12.75L 🏠 EPF: 12% of Basic 📈 Full Salary Breakup 📋 Old vs New Regime Live

Salary Calculator 2026-27

Your In-Hand Salary After All Deductions

Enter your CTC and salary structure. Monthly in-hand salary, tax, EPF, and full breakup shown live for both regimes.

🆔 Tax Regime Selection

💼 CTC & Salary Structure

Annual CTC (Cost to Company)₹12.00 L

₹3 Lakh₹1 Crore

Basic Salary (% of CTC)40%

20%70%

HRA (% of Basic)50%

0%60%

Special / Other AllowancesCalculated

Auto (CTC − Basic − HRA − PF)₹10L

📋 Deductions & Benefits

🏠 Professional Tax State

Employer NPS (80CCD-2) — Both Regimes₹0

₹014% of Basic

💳 Monthly In-Hand Salary

₹0

Annual: ₹0

75% in-hand

In-Hand EPF Income Tax Other Ded.

ANNUAL TAX COMPARISON

📈 New Regime

₹0

₹0/month TDS

📋 Old Regime

₹0

₹0/month TDS

MONTHLY SALARY BREAKUP

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Vikash Royal ARN-356458
B.E. | MBA Finance | NISM Certified | 7+ Years in Finance

📈 CTC to In-Hand Salary — Quick Reference Table FY 2025-26

Approximate monthly in-hand salary at different CTC levels under both regimes. Assumes 40% basic, 50% HRA of basic, 80C ₹1.5L + NPS ₹50K + 80D ₹25K for old regime. New regime with ₹75K standard deduction only.

Annual CTC	Monthly Gross	Monthly EPF	TDS/Month (New)	In-Hand/Month (New)	TDS/Month (Old)	In-Hand/Month (Old)	Best Regime
₹4,00,000	₹33,333	₹1,600	₹0	₹31,533	₹0	₹31,533	Equal
₹6,00,000	₹50,000	₹2,400	₹0	₹47,400	₹400	₹47,000	New Regime
₹8,00,000	₹66,667	₹3,200	₹433	₹62,834	₹0	₹63,267	Old Regime
₹10,00,000	₹83,333	₹4,000	₹1,733	₹77,400	₹0	₹79,133	Old Regime
₹12,00,000	₹1,00,000	₹4,800	₹0	₹94,900	₹3,900	₹91,000	New Regime
₹15,00,000	₹1,25,000	₹6,000	₹13,000	₹1,05,800	₹10,465	₹1,08,335	Old Regime
₹20,00,000	₹1,66,667	₹8,000	₹30,117	₹1,28,350	₹27,040	₹1,31,427	Old Regime
₹30,00,000	₹2,50,000	₹12,000	₹57,027	₹1,80,773	₹55,315	₹1,82,485	Old Regime
₹50,00,000	₹4,16,667	₹20,000	₹1,10,767	₹2,85,700	₹1,14,942	₹2,81,525	New Regime

Assumptions: 40% basic of CTC, HRA 50% of basic, PT ₹200/month. Old regime deductions: standard ₹50K + 80C ₹1.5L + NPS ₹50K + 80D ₹25K + HRA exemption. New regime: standard ₹75K only. EPF = 12% of basic (employee portion). Values are approximate — use the live calculator above for exact figures based on your specific salary structure.

📋 Salary Components in India — What Each Means for Your Take-Home

A typical Indian salary slip has 8–12 components. Here's what each means, how it's taxed, and how it affects your in-hand salary.

🏠

Basic Salary

40–50% of CTC

Foundation of salary. Drives EPF (12%), HRA (40–50%), and gratuity (4.81%). Higher basic = more EPF deduction but more retirement savings.

Fully Taxable

🏠

HRA

40–50% of Basic

House Rent Allowance. Partially or fully exempt if you pay rent (old regime only). Under new regime, fully taxable.

Partial (Old Regime)

📈

Special Allowance

Varies (CTC filler)

Balancing component — whatever remains after basic, HRA, and other components. Fully taxable. Largest component in many structured CTCs.

Fully Taxable

✈️

LTA

5–10% of Basic

Leave Travel Allowance — exempt for actual travel (economy class) for 2 journeys in a 4-year block. Only under old regime.

Exempt (Old, with proof)

🍎

Food / Meal Voucher

Up to ₹2,200/month

Sodexo/Zeta meal vouchers up to ₹50/meal × 2 meals × 22 days = ₹2,200/month are tax-exempt under both regimes. Small but worthwhile.

Up to ₹26,400/yr exempt

📱

Phone / Internet

₹1,200–2,000/month

Mobile reimbursement and internet allowance are tax-free under both regimes if actual bills submitted. Up to ₹24,000/year effectively tax-free.

Exempt with bills

🏠

EPF (Employee)

12% of Basic

Deducted from in-hand salary, invested in EPF at 8.25% tax-free. Qualifies for 80C under old regime. Reduces in-hand but builds retirement corpus.

80C deductible (Old)

🏠

Employer EPF

12% of Basic (in CTC)

Part of CTC but not in gross salary. Split: 8.33% → EPS pension (capped ₹1,250/mo), 3.67% → EPF. You don't see this in payslip but it's in CTC.

Not in taxable income

💸

Gratuity (in CTC)

4.81% of Basic

CTC includes gratuity provision — but it's paid only after 5 years of service. Not received monthly. Tax-free up to ₹20L at the time of payment.

In CTC, not monthly pay

📋

Professional Tax

₹200/month (max)

State tax — only in Maharashtra, Karnataka, WB, AP, Tamil Nadu etc. Max ₹2,500/year. Deductible from income under Sec 16(iii) in old regime.

Deductible under Sec 16

📈 New Tax Regime Impact on Monthly In-Hand Salary — FY 2025-26

How much more in-hand salary do you get under the new regime? The new regime's ₹75K standard deduction and lower slabs significantly boost take-home for many salary ranges.

Annual CTC	In-Hand (New Regime)	In-Hand (Old Regime)*	Monthly Difference	Better Regime
₹5L	₹39,867/mo	₹39,867/mo	₹0	Equal
₹8L	₹62,833/mo	₹63,267/mo	Old saves ₹434	Old Regime
₹10L	₹77,400/mo	₹79,133/mo	Old saves ₹1,733	Old Regime
₹12L	₹94,900/mo	₹91,000/mo	New saves ₹3,900	New Regime ✅
₹15L	₹1,05,800/mo	₹1,08,335/mo	Old saves ₹2,535	Old Regime
₹20L	₹1,28,350/mo	₹1,31,427/mo	Old saves ₹3,077	Old Regime
₹30L	₹1,80,773/mo	₹1,82,485/mo	Old saves ₹1,712	Old Regime
₹50L	₹2,85,700/mo	₹2,81,525/mo	New saves ₹4,175	New Regime ✅

* Old regime with max deductions: Standard ₹50K + 80C ₹1.5L + NPS 80CCD(1B) ₹50K + 80D ₹25K + HRA exemption (~₹1.2L for metro). New regime with standard deduction ₹75K only. Key insight: New regime wins at ₹12L (due to 87A zero tax) and above ₹45L (due to surcharge cap at 25% vs 37% in old regime). Old regime wins in the ₹8L–₹40L range only if you have large genuine deductions. Use the calculator to find your exact crossover point.

💡 4 Smart Ways to Maximise Your In-Hand Salary

Legal salary restructuring and regime choices that can add ₹3,000–₹15,000 to your monthly in-hand without any salary hike.

📈

Choose the Right Regime — The Single Biggest Lever

Choosing new regime for a ₹12L CTC employee saves ₹46,800/year = ₹3,900/month extra in-hand — with zero investment required. Use this calculator every April to compare both regimes for your exact income and deductions. Declare your regime to your employer in April. At ₹12.75L gross, new regime = zero tax. At ₹15L with full deductions, old regime wins by ₹30,000+/year.

💼

Add Employer NPS to CTC — Works in Both Regimes

Restructure your CTC to include employer NPS contribution under 80CCD(2) — up to 14% of basic salary is deductible even under the new tax regime. At ₹50,000 basic/month (₹6L/year basic): 14% = ₹84,000 employer NPS. At 30% slab, this saves ₹26,208 in tax annually = ₹2,184/month more in-hand without any change in CTC. Submit a request to HR — it reduces employer's CTC allocation differently but is tax-efficient.

🌟

Lower Your Basic — Reduce EPF Deduction

A lower basic salary means less EPF deduction (12% of basic). If your basic is ₹60,000/month, EPF deduction = ₹7,200/month. At 20% basic (₹24,000), EPF = ₹2,880/month — ₹4,320/month more in-hand. However, lower basic means lower HRA exemption, lower gratuity, and less EPF corpus. Balance: 40% basic is usually optimal — low enough for manageable EPF, high enough for reasonable HRA and gratuity.

🚫

Never Skip Regime Declaration to Employer

If you don't declare your tax regime to HR/payroll in April, your employer defaults to the new regime for TDS. If you're in the old regime with large deductions (80C + HRA + NPS), you'll overpay TDS all year and wait for ITR refund — tying up cash. Submit Form 10-IEA (election for old regime) to HR at the start of FY 2025-26. You can change at ITR time but correct TDS declaration avoids the 12-month cash flow drag.

❓ Salary Calculator — Frequently Asked Questions

Most searched in-hand salary questions for India FY 2025-26 (AY 2026-27).

In-hand salary = CTC − Employer EPF (not in payslip) − Employer Gratuity provision − then from gross salary:

Step 1: Calculate Gross Salary = CTC − Employer EPF (12% of basic) − Gratuity provision (4.81% of basic)
Step 2: Deduct Employee EPF = 12% of basic salary
Step 3: Deduct Professional Tax (state-specific, ₹200/month in Maharashtra)
Step 4: Calculate TDS (income tax) based on regime, deductions, and taxable income
Step 5: In-hand = Gross − EPF employee − PT − TDS

Example: ₹12L CTC, 40% basic (₹4.8L), new regime:
Gross ≈ ₹10.9L | EPF ₹57,600 | PT ₹2,400 | TDS ₹0 (zero tax at ₹12L new regime) | In-hand ≈ ₹10.4L/year = ₹86,667/month

Three different concepts:

CTC (Cost to Company): Total annual cost to employer — includes direct salary + employer EPF (12% of basic) + employer ESIC (if applicable) + gratuity provision + any benefits. This is what your offer letter says.

Gross Salary: CTC minus employer contributions (EPF, gratuity) = what appears on your payslip before deductions. Gross = Basic + HRA + Special Allowance + LTA + other allowances.

In-Hand (Take-Home): What gets credited to your bank account = Gross Salary minus employee EPF (12% of basic) minus Professional Tax minus Income Tax (TDS).

Typical ratio: CTC ₹12L → Gross ₹10.9L → In-Hand ₹8.5–10.5L depending on tax regime and deductions claimed.

The new regime for FY 2025-26 has two major in-hand salary benefits:

1. Higher standard deduction (₹75,000 vs ₹50,000): Extra ₹25,000 deduction vs old regime → saves ₹7,800 in tax at 30% slab = ₹650/month more in-hand.

2. Zero tax up to ₹12L taxable income (87A rebate): A ₹12L gross salary employee pays ₹0 tax under new regime (₹12L − ₹75K std deduction = ₹11.25L taxable ≤ ₹12L limit) vs potentially ₹46,800+ under old regime. That's ₹3,900/month more in-hand — without any investment.

3. Simpler slabs with lower rates: New regime rates are 5%/10%/15%/20%/25%/30% — lower for middle income vs old regime's 5%/20%/30% with fewer slabs.

Use the regime toggle in the calculator above to see the exact monthly difference for your CTC.

Employee EPF deduction = 12% of basic salary per month.

Examples:
• Basic ₹20,000/month → EPF ₹2,400/month
• Basic ₹30,000/month → EPF ₹3,600/month
• Basic ₹50,000/month → EPF ₹6,000/month
• Basic ₹1,00,000/month → EPF ₹12,000/month

Employer also contributes 12% of basic, split as:
• 8.33% → EPS (Employee Pension Scheme, capped at ₹1,250/month)
• 3.67% → EPF account

EPF earns 8.25% p.a. tax-free (FY 2025-26 rate). Your EPF balance is visible on the EPFO member portal using your UAN. Both employee and employer EPF are EEE — tax-free on investment, interest, and withdrawal after 5 years.

Professional Tax (PT) is a state-level employment tax — maximum ₹2,500/year.

States WITH Professional Tax:
• Maharashtra: ₹200/month for salary >₹10,000
• Karnataka: ₹200/month for salary >₹15,000
• West Bengal: ₹208/month
• Andhra Pradesh: ₹150–200/month
• Tamil Nadu: ₹75–150/month
• Telangana, Gujarat, Madhya Pradesh: varies

States WITHOUT Professional Tax:
Delhi, UP, Rajasthan, Haryana, Punjab, Bihar, Jharkhand, Himachal Pradesh, and most North Indian states.

PT is deductible from taxable income under Section 16(iii) — slightly reduces your tax. Employer deducts from salary and remits to state government monthly/annually.

Five legal ways to increase in-hand pay without changing CTC:

1. Switch tax regime: At ₹12L CTC, switching to new regime saves ₹3,900/month in TDS.

2. Add Employer NPS (80CCD2): Ask HR to include employer NPS in your CTC. Deductible in both regimes. ₹84,000/year employer NPS saves ₹26,208 tax at 30% = ₹2,184/month more in-hand.

3. Claim meal vouchers: ₹2,200/month in meal coupons is tax-free. If currently getting as special allowance (taxable), restructure to food coupons — saves ₹686/month at 30% slab.

4. Mobile/internet reimbursement: ₹1,500–2,000/month in phone reimbursement is tax-free with bills. Saves ₹468–624/month at 30% slab.

5. Opt for NPS instead of higher basic: Lower basic reduces EPF deduction — but maintain sufficient basic for HRA and gratuity.

Gratuity = (Basic Salary ÷ 26) × 15 × Years of Service, paid at retirement or resignation after 5 years.

Annual gratuity provision in CTC = Basic × 15/26 ≈ 4.81% of basic salary.

At ₹40,000 basic/month: Annual gratuity provision = ₹40,000 × 12 × 4.81% = ₹23,088/year in CTC, but this is NOT paid monthly — it accumulates and is paid only after 5 years of service.

Key points:
• Gratuity up to ₹20 lakh is completely tax-free
• You lose gratuity entirely if you leave before 5 years at the same company
• Some companies show gratuity in CTC, inflating the apparent total vs actual take-home
• Always subtract employer EPF and gratuity from CTC to get gross salary

📈 Maximise Your In-Hand Salary — Free CTC Optimisation

Most employees leave ₹3,000–₹12,000/month on the table through wrong regime choice, non-optimal salary structure, or unclaimed deductions. Vikash Royal will review your offer letter or current CTC, identify the right tax regime, and recommend salary restructuring strategies to maximise your monthly take-home. SEBI-Registered. ARN: ARN-356458

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