You receive a job offer letter stating your CTC (Cost to Company) is ₹12,00,000 per annum. You calculate ₹1,00,000 per month and start planning your expenses. Then your first salary credit arrives: ₹72,000. Where did the other ₹28,000 go?
This guide explains the complete breakdown of an Indian salary structure and how to calculate your actual in-hand salary from CTC.
What Is Included in CTC?
CTC includes everything your employer spends on you, not just what you receive. A typical Indian CTC structure includes:
| Component | Typical % | Monthly (₹12L CTC) | Reaches Your Bank? |
|---|---|---|---|
| Basic Salary | 40-50% | ₹40,000 – ₹50,000 | ✅ Yes (minus TDS) |
| HRA | 20-25% | ₹20,000 – ₹25,000 | ✅ Yes (minus TDS) |
| Special Allowance | 10-20% | ₹10,000 – ₹20,000 | ✅ Yes (minus TDS) |
| Employer EPF (12%) | ~5% | ₹4,800 (capped) | ❌ Goes to PF account |
| Gratuity | ~4.8% | ₹2,400 | ❌ Payable after 5 years |
| Insurance | 1-3% | ₹1,000 – ₹3,000 | ❌ Employer-paid policy |
Common Deductions from Gross Salary
Employee EPF (12% of Basic): If your basic is ₹40,000/month, ₹4,800 is deducted for EPF (capped at 12% of ₹15,000 = ₹1,800 for most companies, though many contribute on actual basic).
Professional Tax: ₹200/month in most states (₹2,500/year in Maharashtra). This varies by state.
TDS (Tax Deducted at Source): Your employer estimates your annual tax liability and deducts it monthly. This depends on your tax regime choice and declared investments.
Complete Calculation Example
CTC: ₹12,00,000/year
| Component | Annual | Monthly |
|---|---|---|
| Basic Salary | ₹4,80,000 | ₹40,000 |
| HRA | ₹2,40,000 | ₹20,000 |
| Special Allowance | ₹2,11,200 | ₹17,600 |
| Employer EPF | ₹21,600 | ₹1,800 |
| Gratuity | ₹23,077 | ₹1,923 |
| Insurance | ₹24,123 | ₹2,010 |
Gross Salary (monthly): ₹40,000 + ₹20,000 + ₹17,600 = ₹77,600
Deductions:
- Employee EPF: -₹1,800
- Professional Tax: -₹200
- TDS (estimated at new regime): -₹5,500
In-hand salary: ₹70,100/month (vs ₹1,00,000 CTC/month)
That is a 30% difference between CTC and in-hand — this is why understanding the breakdown matters before accepting an offer.
Tips for Negotiating Salary
- Always ask for the salary breakup, not just the CTC number
- A higher Basic means higher EPF contribution (good for retirement) but also higher tax liability
- If you live in a rented apartment in a metro city, HRA can save significant tax — use our HRA Calculator
- Variable pay and bonuses are part of CTC but not guaranteed — do not count them in monthly budgeting
Use our Salary Calculator to compute your exact in-hand salary from any CTC figure.