Salary Guides
CTC is the total your employer spends on your employment in a year. In hand salary is what actually lands in your bank each month after provident fund, professional tax, and income tax leave the payslip. Under a plain salary structure the gap runs roughly 4 to 17 percent, and it widens as pay rises.
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Confusion between CTC and in hand salary usually starts because there are not two numbers in play. There are three.
CTC, cost to company, is the employer's accounting figure: everything they commit to spending on you in a year. It includes your pay, but also money that never touches your bank, like the employer's provident fund share and, in many offers, a gratuity provision or an insurance premium.
Gross salary is CTC minus those employer side items. It is the figure your payslip opens with, the sum of basic, HRA, and allowances actually payable to you.
In hand salary is gross minus the deductions withheld from you: your own provident fund contribution, professional tax, and income tax deducted at source. This is the bank credit, and it is the only one of the three you can spend. A fuller treatment of the first figure sits in the guide to what CTC means in India.
Run each component through two questions. Does it count toward the CTC on my offer? Does it reach my bank every month? The answers rarely match, and the mismatch is the whole difference.
| Component | Counted in CTC? | Reaches your bank monthly? |
|---|---|---|
| Basic pay | Yes | Yes |
| HRA and other allowances | Yes | Yes |
| Employer's EPF contribution | Yes | No, it goes to your PF account |
| Gratuity provision | Often | No, payable only at exit if eligible |
| Insurance premium | Sometimes | No |
| Variable pay or bonus | Yes | No, paid out on its own cycle |
| Your EPF contribution | Inside your gross | No, withheld to your PF account |
| Professional tax | Inside your gross | No, withheld for the state |
| Income tax (TDS) | Inside your gross | No, withheld for the government |
Note that the withheld money is not lost. Provident fund accrues to you with interest, and TDS is adjusted against your final tax bill. But none of it buys groceries this month, which is the sense in which people mean in hand.
The ledger also explains why the gap between the two figures is not a fixed percentage. A structure that keeps everything as fixed monthly pay leaves a narrow gap. A structure that stacks variable pay, gratuity, and insurance into the same CTC can leave a chasm, with both offers wearing the same headline number.
Take a plain structure for the 2026 to 2027 financial year. Basic at 50% of CTC, both PF contributions reckoned on the ₹15,000 monthly wage ceiling, professional tax at ₹200 a month, tax on the new regime.
| Line | Amount per year |
|---|---|
| CTC | ₹10,00,000 |
| Less employer EPF share (12% of basic, on the ceiling) | ₹21,600 |
| Gross salary | ₹9,78,400 |
| Less your EPF share | ₹21,600 |
| Less professional tax | ₹2,400 |
| Less income tax | ₹0 |
| In hand for the year | ₹9,54,400 |
| In hand per month | about ₹79,500 |
The zero on the tax line is not a typo. After the ₹75,000 standard deduction, taxable income here is ₹9,03,400, which sits within the ₹12 lakh Section 87A rebate zone under the new regime, so slab tax is wiped out. Roughly 95% of this CTC reaches the bank. Load a gratuity provision or a variable component into the same ₹10,00,000 and that share falls. The CTC to in hand salary chart runs this same working across fourteen CTC levels from 3 lakh to 30 lakh.
Two colleagues on identical CTCs can see different bank credits, and neither payroll team is wrong.
Regime choice. One picked the new regime, the other stayed on the old regime with heavy HRA and Chapter VI A claims. Their TDS diverges every month.
State of work. Professional tax slabs are set by states. A Bengaluru payslip and a Delhi payslip treat it differently.
PF base. One employer contributes on the ₹15,000 ceiling, another on actual basic. The second employee retires richer and spends leaner.
Voluntary PF. An employee raising their own contribution above 12% trims the monthly credit by choice.
Structure of the CTC itself. Variable pay, joining bonus clawbacks, gratuity provisioning: each moves money out of the monthly cycle. Gratuity in particular is a promise that vests with service, computed as wages into 15 into years of service, divided by 26, and the gratuity calculator shows what it eventually amounts to.
The salary structure guide covers how these components are typically apportioned across Indian private companies.
The single most common salary miscalculation in India is also the simplest: taking the CTC on an offer and dividing it by twelve. On a ₹10,00,000 offer that shortcut promises ₹83,333 a month. The plain structure above actually pays about ₹79,500, and a structure with gratuity, insurance, and a variable slice loaded in can pay well under ₹70,000 against the same headline.
The trap works because CTC is an annual, employer side figure being pressed into service as a monthly, employee side one. It was never built for that job. The employer's PF share never passes through your account in the first place, the variable component pays on its own calendar, and the tax and statutory deductions apply only after all of that is stripped away.
The habit is worth breaking in both directions. Candidates who divide by twelve feel shortchanged by perfectly correct payslips. Recruiters who let the assumption stand at offer stage inherit the disappointment at joining. The honest monthly figure takes two minutes to compute and forestalls weeks of quiet resentment.
Candidates hear the CTC and mentally divide by twelve. The first payslip then reads like a broken promise, even when every rupee is accounted for. The cure is candor at offer stage: show the structure, name the deductions, and let the monthly figure be seen before signing.
Offrd builds that into the paperwork. The offer letter generator produces a compensation annexure where the salary structure auto balances to total CTC, with EPF, ESI, and professional tax computed at the document level. The payslips that follow inherit the same heads, so the number a candidate saw in the annexure is the number the payslip pays. Pricing starts at ₹99 per document, with 50 free credits on signup and no card required.
Almost never in formal employment. Provident fund applies to most establishments with 20 or more employees, professional tax applies in most states, and TDS applies once income crosses the tax threshold. Equality between the two figures usually signals informal pay without statutory cover, which is a problem, not a perk.
Yes, but on a delay. It is deposited into your provident fund account against your UAN and earns interest at the EPF rate, 8.25% at present. It is part of your CTC and part of your retirement corpus. It is simply not part of this month's bank credit.
It is common practice, and it is defensible accounting since the employer does carry the liability. But gratuity generally becomes payable only after five years of continuous service, with fixed term employees eligible after one year under the Labour Codes. If you leave earlier, that slice of CTC was never going to reach you, which is worth knowing when comparing offers.
Negotiate the structure, not the headline. Ask for the monthly in hand figure in writing, ask what share of CTC is fixed versus variable, and ask whether gratuity or insurance is loaded in. A slightly lower CTC with fully fixed pay can beat a bigger one that leans on components you may never collect.
Partly convention, partly self interest, partly genuine accounting. CTC is the number the employer's books carry, it makes offers look larger, and it lets companies with different structures be compared on one line. None of that helps you plan a monthly budget, which is why asking for the expected in hand figure in writing is a reasonable and increasingly normal request.
Offrd is used by 4,000+ companies across India to issue offer letters, compensation annexures, and payslips from one salary structure. 50 free credits on signup, no card needed.