CTC vs in-hand salary: where your money actually goes
PF, variable pay and tax explained with one simple example, so you can compare offers on what reaches your bank account.
Your CTC is what the company spends on you in a year, not what reaches your bank account. Understanding CTC vs in-hand salary helps you compare offers and plan your budget correctly.
What is inside your CTC
A typical CTC has these parts:
| Part | Paid to you monthly? |
|---|---|
| Basic pay | Yes |
| HRA and other allowances | Yes |
| Variable pay or bonus | No, paid later and only if earned |
| Employer PF (12% of basic) | No, goes to your PF account |
| Gratuity, insurance | No |
What comes out of your monthly pay
From the fixed monthly part, three deductions usually come out:
- Your PF contribution: 12% of basic pay
- Professional tax: a small amount set by your state
- Income tax (TDS): depends on your income and the tax regime you choose
A simple example
On a 12 lakh CTC with 1 lakh variable pay and basic at 40% of fixed pay, about 82,900 rupees a month is left before income tax and professional tax. Try your own numbers:
In-hand salary calculatorEnter your CTC and see your monthly take-home after variable pay and PF. Open calculatorHow to use this when you negotiate
Always compare offers on in-hand pay and fixed salary, not only CTC. Read how to answer "what is your expected CTC?" before your next HR call.
Common questions
Why is my in-hand salary so much lower than CTC?
CTC includes variable pay, employer PF, gratuity and insurance, none of which is paid monthly, and your own PF and tax are deducted from what remains.
