CTC to In-Hand Salary Calculator India 2025-26: Step-by-Step Guide with Examples

Discover how to calculate your in-hand salary from CTC in India for FY 2025-26. Learn about latest tax rules, old vs new regime, deductions, and examples with practical take-home pay breakdowns.

When you receive a job offer in India, the number you usually see on the offer letter is the CTC (Cost to Company). While it looks attractive, what actually matters to you every month is the in-hand salary—the amount that gets credited to your bank account after all deductions.

This is where a CTC to in-hand salary calculator becomes useful. It helps you break down your package into fixed pay, benefits, contributions, and taxes, giving a realistic picture of what you’ll actually take home.

In this guide, we’ll walk through the latest salary structures, recent tax changes for FY 2025-26, and how you can easily calculate your net take-home pay. We’ll also show worked examples across different salary levels so you can compare the old and new tax regimes and make the right decision.

Understanding Key Terms

Before diving into calculations, let’s clarify the most important terms that often cause confusion.

What is CTC?

CTC stands for Cost to Company. It represents the total annual expense a company incurs on an employee. This includes:

• Fixed salary: Basic pay, dearness allowance (DA), and special allowances
• Variable components: Performance bonus, incentives, or commission
• Employer contributions: Provident Fund (PF), gratuity, National Pension Scheme (NPS) contributions
• Perks and benefits: Health insurance premium, meal coupons, company car, etc.

Important: Not all components of CTC are directly paid to you. Contributions like gratuity or employer’s PF are future benefits, not part of your monthly take-home salary.

Gross Salary vs. Net Salary

• Gross Salary: This is your salary after removing employer contributions but before tax deductions. It includes basic pay, allowances, and bonuses.
• Net Salary (In-hand Salary): The amount you actually receive in your bank account each month after subtracting:
  • Income tax
  • Employee’s PF contribution
  • Professional tax (where applicable)
  • Other statutory deductions

Here’s a quick comparison:

Allowances and Deductions

Most Indian salaries include a mix of allowances and deductions. Common ones are:

• Basic Salary: Usually 40–50% of CTC; forms the core for other calculations like PF and HRA.
• HRA (House Rent Allowance): Tax-exempt under old regime if you live in rented accommodation.
• Special Allowance: Fully taxable.
• Provident Fund: Employee contributes 12% of basic salary; employer contributes separately.
• Professional Tax: State-specific, usually ₹200 per month in states like Maharashtra.

For official rules on allowances and exemptions, you can refer to the Income Tax Department portal or the EPFO website.

Recent Tax & Deduction Changes You Should Know (FY 2025-26)

To accurately use a CTC to in-hand salary calculator for FY 2025-26, you must understand the latest tax slabs, deductions, and rebates. Below are the key updates you need:

Updated Tax Slabs Under the New Regime

Here’s how income is taxed under the new tax regime for FY 2025-26 (Assessment Year 2026-27) for resident individuals:

These rates apply only under the new regime. Under the old regime, the slabs and rates are different, and many deductions or exemptions (like HRA, 80C etc.) apply. For a full comparison, refer to resources like PNB MetLife’s income tax slabs page.

Standard Deduction

• Under the new regime, the standard deduction for salaried individuals and pensioners has been increased to ₹75,000.
• Old regime continues to offer a standard deduction of ₹50,000.

Standard deduction reduces your gross salary before calculating taxable income. So larger standard deduction means less tax burden when income is modest.

Section 87A Rebate

This rebate is very relevant when computing in-hand salary, especially for mid-range CTCs.

• For FY 2025-26, under the new tax regime, individuals with taxable income up to ₹12,00,000 qualify for a rebate of up to ₹60,000, which can reduce their tax liability to zero.
• Under the old regime, rebate remains at ₹12,500 for individuals whose taxable income does not exceed ₹5,00,000.

There was an important clarification in August 2025: for salaried individuals under the new regime, combining the ₹75,000 standard deduction and the ₹60,000 rebate, incomes up to ₹12.75 lakh become tax-free (i.e. no income tax) provided there are no special-rate incomes like short-term capital gains.

Exclusions & Special-Rate Income

Not everything is eligible for the rebate or standard deductions under the new regime:

• Special-rate incomes (e.g. short-term capital gains under Section 111A, lottery winnings, etc.) are not eligible for Section 87A rebate. Even if your salary income after standard deduction is within the rebate limit, these incomes are taxed separately.
• The drafting error around standard deduction (in one clause of the Tax Act) was corrected so that the ₹75,000 standard deduction clearly applies for FY 2025-26. That correction ensures the ₹12.75 lakh tax-free threshold for salaried incomes works as intended.

Old Regime: Deductions & Benefits Still Apply

If you opt for the old tax regime, here’s what remains valuable:

• Standard deduction of ₹50,000.
• Deductions under Section 80C (e.g. PF, PPF, ELSS), 80D (health insurance), House-Rent Allowance (HRA), Leave Travel Allowance (LTA) etc., as applicable. These allow lowering of taxable income significantly.

How to Calculate In-hand Salary from CTC: Step by Step

A CTC to in-hand salary calculator works on a simple principle: break down the CTC into its components, remove what isn’t part of monthly pay, apply deductions, and arrive at the take-home. Here’s how the process works.

Step 1: Break Down the CTC

The employer’s offer letter usually lists CTC as one figure, but it includes many elements. A typical breakup looks like this:

• Basic Salary
• House Rent Allowance (HRA)
• Special Allowances
• Employer Provident Fund (EPF) contribution
• Gratuity contribution
• Performance bonus / variable pay
• Other perks (insurance premium, food coupons, etc.)

Only some of these are directly paid into your account every month.

Step 2: Remove Employer Contributions

Employer contributions like EPF (12% of basic) and gratuity (usually 4.81% of basic) are part of CTC but not part of your monthly take-home. These are long-term benefits.

For example, if your CTC is ₹10,00,000 and includes ₹50,000 towards gratuity and ₹1,20,000 as employer PF, these amounts must be excluded from gross salary.

Step 3: Compute Gross Salary

Gross salary = CTC – (Employer PF + Gratuity + Non-cash benefits)

This figure reflects what you’re eligible to receive in a year before personal deductions and taxes.

Step 4: Identify Taxable Salary

From gross salary, calculate your taxable income. This step depends on the regime you choose:

• New Regime: Apply ₹75,000 standard deduction (FY 2025-26) and directly calculate tax using the latest slabs. Very few exemptions apply.
• Old Regime: Deduct ₹50,000 standard deduction plus other eligible deductions like HRA, LTA, and investments under Section 80C (up to ₹1.5 lakh).

For clarity on eligible deductions, see the Income Tax Department’s guidelines.

Step 5: Apply Tax Slabs & Rebate

Using the taxable salary, apply slab rates under the chosen regime. Don’t forget:

• Health & Education Cess of 4% applies on tax payable.
• Under the new regime, incomes up to ₹12.75 lakh for salaried individuals may effectively be tax-free after standard deduction and Section 87A rebate.

Step 6: Subtract Statutory Deductions

From gross salary, subtract:

• Employee’s PF contribution (12% of basic)
• Professional Tax (₹200/month in states like Maharashtra, none in states like Delhi)
• Income Tax (as per regime chosen)

The result is net salary (in-hand pay)—the figure credited to your account each month.

Quick Example

Suppose your CTC is ₹12,00,000 per year. A possible breakup:

• Gross Salary = ₹12,00,000 – (57,600 + 23,000 + 99,400) = ₹10,20,000
• Less Employee PF (₹57,600) = ₹9,62,400
• Less Professional Tax (₹2,400 if applicable) = ₹9,60,000 approx.
• Then apply income tax based on chosen regime.

This final number, divided by 12, gives your monthly in-hand salary.

Old Regime vs New Regime: Which One Works Better?

When converting CTC to in-hand salary, choosing the right tax regime makes a big difference. Both options remain available for FY 2025-26, but the benefits vary depending on your income and eligible deductions.

The New Regime: Simpler but Limited

The new regime is designed to be straightforward. It has:

• Reduced tax rates across slabs
• Higher standard deduction of ₹75,000
• Section 87A rebate up to ₹60,000 for taxable incomes under ₹12,00,000
• Fewer exemptions and deductions (HRA, LTA, 80C, 80D etc. not allowed)

This works well for people who:

• Do not have significant tax-saving investments
• Receive most of their pay as taxable allowances
• Want a cleaner structure without paperwork

The Old Regime: Flexible but Paper-Heavy

The old regime follows the traditional model:

• Standard deduction of ₹50,000
• Exemptions like House Rent Allowance (HRA) and Leave Travel Allowance (LTA)
• Deductions under Section 80C (up to ₹1.5 lakh), 80D (health insurance), and others

This regime favors employees who:

• Live in rented accommodation and claim HRA
• Invest in PF, PPF, ELSS, NPS, or pay housing loan interest
• Have higher annual deductions (usually ₹2–3 lakh or more)

For full official details, you can refer to the Income Tax portal.

Break-even Point Between Old and New

The choice often depends on how much you can claim as deductions:

A detailed salary calculator like ET Money’s tool can help compare scenarios quickly.

Example Comparison

Let’s take a mid-level CTC of ₹15,00,000 per year.

• New Regime:
  • Gross Salary after removing employer PF & gratuity = ~₹12.8 lakh
  • Less standard deduction (₹75,000) = ₹12.05 lakh taxable
  • Tax after 87A rebate = zero (since below ₹12.75 lakh effective limit)
  • In-hand salary = almost full gross minus PF + professional tax
• Old Regime:
  • Gross = ₹12.8 lakh
  • Less deductions (₹50,000 standard + ₹1.5 lakh 80C + ₹25,000 80D) = ~₹10.75 lakh taxable
  • Tax liability = about ₹95,000 including cess
  • In-hand salary is reduced accordingly

Result: For this case, the new regime gives higher take-home salary unless the person claims larger deductions like home loan interest.

In short:

• New regime suits most salaried individuals with modest deductions.
• Old regime is useful for those who can claim multiple exemptions and deductions.

Worked Examples: CTC to In-hand Salary Across Different Levels

To make the concept clearer, let’s see how CTC to in-hand salary works at different income levels. These are simplified examples using realistic assumptions for FY 2025-26. Actual figures may vary depending on allowances, state-wise professional tax, and personal investments.

Example 1: CTC ₹6 Lakh (Entry-Level Job)

Breakdown Assumptions

• Basic Salary: ₹2.4 lakh
• HRA: ₹1.2 lakh
• Special Allowance: ₹1.5 lakh
• Employer PF: ₹28,800
• Gratuity & Other Benefits: ₹21,200

Calculation under New Regime

• Gross Salary = ₹6,00,000 – (28,800 + 21,200) = ₹5,50,000
• Less Standard Deduction (₹75,000) = ₹4,75,000 taxable
• Falls under 5% slab → Tax = ₹3,750
• After 87A rebate (₹3,750), tax = Nil
• Net In-hand = Gross – Employee PF (₹28,800) ≈ ₹5,21,200 annually (~₹43,400/month)

Calculation under Old Regime

• Gross = ₹5,50,000
• Less Standard Deduction (₹50,000) = ₹5,00,000 taxable
• Tax before rebate = ₹12,500 → After 87A rebate = Nil
• Net In-hand ≈ ₹5,21,200 (same outcome for this slab)

Example 2: CTC ₹15 Lakh (Mid-Level Professional)

Breakdown Assumptions

• Basic: ₹6 lakh
• HRA: ₹3 lakh
• Special Allowance: ₹3.8 lakh
• Employer PF: ₹72,000
• Gratuity & Benefits: ₹1.28 lakh

New Regime

• Gross = ₹15,00,000 – (72,000 + 1,28,000) = ₹12,99,999 (~₹13 lakh)
• Less Standard Deduction = ₹12,25,000 taxable
• Since below ₹12.75 lakh, rebate applies → Tax = Nil
• In-hand = Gross – Employee PF (₹72,000) ≈ ₹12.2 lakh (~₹1.02 lakh/month)

Old Regime (assuming deductions: 80C = 1.5 lakh, 80D = 25,000)

• Gross = ₹12.99 lakh
• Less Standard Deduction (₹50,000) + Investments (₹1.75 lakh) = ₹10.74 lakh taxable
• Tax liability ≈ ₹95,000 incl. cess
• Net In-hand ≈ ₹11.25 lakh (~₹93,800/month)

For this income, the new regime gives a better result unless the employee claims very high deductions.

Example 3: CTC ₹50 Lakh (Senior Professional/Manager)

Breakdown Assumptions

• Basic: ₹20 lakh
• HRA: ₹8 lakh
• Special Allowance: ₹15 lakh
• Employer PF: ₹2.4 lakh
• Gratuity & Benefits: ₹4.6 lakh

New Regime

• Gross = ₹50,00,000 – (2.4 lakh + 4.6 lakh) = ₹43 lakh
• Less Standard Deduction (₹75,000) = ₹42.25 lakh taxable
• Tax as per slabs ≈ ₹9.25 lakh + 4% cess ≈ ₹9.6 lakh
• Net In-hand = ₹43 lakh – Employee PF (₹2.4 lakh) – Tax (₹9.6 lakh) ≈ ₹31 lakh (~₹2.58 lakh/month)

Old Regime (with heavy deductions: 80C, 80D, home loan interest, etc. = ₹4 lakh total)

• Taxable Income = ₹43 lakh – (₹50,000 + ₹4 lakh) = ₹38.5 lakh
• Tax ≈ ₹8.5 lakh + cess ≈ ₹8.85 lakh
• Net In-hand ≈ ₹31.75 lakh (~₹2.64 lakh/month)

At very high salaries, both regimes give similar outcomes, but the old regime may save slightly more if housing loan benefits are maximized.

For precise calculations, you can try digital tools like Groww’s salary calculator, which allow you to adjust inputs for bonuses, PF, and tax regime.

Other Deductions & Components That Can Affect In-hand Salary

Even after choosing the right tax regime, your in-hand salary may differ from expectations. That’s because several other components influence how much actually gets credited to your account each month.

Bonus and Variable Pay

Many companies include performance bonuses, annual incentives, or sales commissions as part of CTC. These amounts are not paid monthly. Instead, they may be released quarterly or yearly, depending on performance and company policy.

For example, if your CTC includes a ₹1 lakh annual bonus, your monthly in-hand salary won’t reflect this until the payout happens. It’s important to check whether the bonus is guaranteed or linked to performance.

Professional Tax

Professional tax is a state-level levy, and its impact varies:

• Maharashtra: ₹200 per month (for salary above ₹10,000)
• Karnataka: ₹200 per month (for salary above ₹15,000)
• Delhi & Haryana: No professional tax

This amount, though small compared to income tax, still reduces the monthly take-home pay. A complete list is available on the Labour Department portals of respective states.

Provident Fund (PF)

Both employee and employer contribute 12% of basic salary to the Employees’ Provident Fund (EPF). While the employer’s contribution is not part of your in-hand, your own contribution is deducted from salary every month.

For example, with a basic pay of ₹40,000, the employee PF deduction will be ₹4,800 monthly. Over time, this builds a retirement corpus, but in the short run, it lowers net pay. More details are available on the EPFO portal.

Gratuity

Employers often include gratuity in CTC, usually 4.81% of basic salary. However, gratuity is payable only if you complete five years with the company. Since it isn’t part of monthly pay, it should not be counted in in-hand salary.

NPS Contributions

Some companies offer National Pension Scheme (NPS) as part of salary structure. If you voluntarily contribute, you can claim an extra tax deduction of up to ₹50,000 under Section 80CCD(1B) (only in the old regime). While this lowers taxable income, it reduces your immediate take-home because the contribution is deducted from salary.

Insurance Premiums and Perks

• Group health insurance premiums paid by employers are sometimes included in CTC.
• Meal cards, fuel allowance, or company-leased car policies may also appear in salary slips.

These add value to your package but don’t increase your cash in-hand every month.

Special Incomes

Short-term capital gains, stock options (ESOPs), or allowances taxed at special rates don’t qualify for rebates like Section 87A. If you have such components in your salary, they may increase your tax liability, reducing net salary.

In short: while calculators give a good estimate, your CTC to in-hand salary calculation must also consider PF, gratuity, state-wise professional tax, and variable pay. Ignoring these factors often leads to an inflated expectation of monthly earnings.

Free Tools to Calculate Your In-hand Salary

While you can manually compute your CTC to in-hand salary, using an online calculator saves time and reduces errors. A good tool should:

• Allow you to switch between old and new tax regimes
• Accept custom inputs for allowances, PF, professional tax, and bonuses
• Show monthly and annual in-hand salary separately
• Reflect the latest FY 2025-26 tax rules

Reliable options include:

• ClearTax Salary Calculator
• ET Money Salary Calculator
• Groww Salary Calculator

These platforms are frequently updated and provide side-by-side comparisons of both tax regimes.

Conclusion

Understanding the difference between CTC and in-hand salary is essential before accepting a job offer or planning finances. With the new rules for FY 2025-26—especially the ₹75,000 standard deduction and the enhanced Section 87A rebate—salaried individuals earning up to ₹12.75 lakh in the new regime can potentially pay zero tax.

Still, the old regime may benefit those who claim large deductions through investments, insurance, and housing loan interest. The best approach is to compare both regimes every year using a reliable CTC to in-hand salary calculator to see which works in your favor.

By carefully examining allowances, deductions, and employer contributions, you can set realistic expectations of your monthly take-home pay.

FAQ

How do I calculate in-hand salary from CTC?

Subtract employer contributions, gratuity, and perks from CTC to get gross salary. Then reduce income tax, employee PF, and professional tax to find in-hand salary.

Which is better: old or new tax regime for salary in India?

The new regime benefits most salaried individuals with fewer deductions, while the old regime works better if you can claim higher exemptions and tax-saving investments.

Is professional tax applicable across all Indian states?

No. States like Maharashtra and Karnataka levy professional tax, while others such as Delhi and Haryana do not.

What is the standard deduction for FY 2025-26?

The standard deduction is ₹75,000 under the new regime and ₹50,000 under the old regime for salaried individuals.

How much in-hand salary will I get if my CTC is ₹10 lakh?

On average, the in-hand salary is about 80–82% of CTC after PF and tax deductions. Exact figures depend on the chosen tax regime and salary structure.

Does employer PF contribution affect my take-home pay?

No, employer PF contribution is part of CTC but not credited monthly. Only your PF deduction reduces in-hand salary.

Can I switch between old and new regimes each year?

Yes. Salaried employees can select a regime each financial year while filing returns. Employers may also allow mid-year declarations.