When you receive any job offer, one of the first figures that catches your attention is CTC. It may look impressive on paper, but some people are confused about how much their CTC to In Hand Salary. So you understand the CTC calculation into your hand salary, use the salary calculator to get the exact value, and plan your finances accordingly. In this blog, we will tell you about the CTC, in-hand salary, how to calculate in-hand salary from CTC, the calculation formula, and more.
What Is CTC
Cost-to-Company (CTC) is the total annual cost that a company spends on an employee. It includes the full compensation package offered to employees, such as salary and job benefits. It also covers allowances and required deductions. Here is the formula used to calculate CTC to In Hand Salary
Cost to Company (CTC) = Gross Salary + Allowances + Benefits + Employer Contributions.
The benefits in CTC are PF, gratuity, life insurance and health insurance.
For example,
- Employee’s basic salary is ₹10,00,000
- Employer’s PF contribution is ₹1,20,000
- Annual bonus is ₹50,000
- CTC will be ₹11,70,000.
Components of CTC
Before calculate in hand salary from CTC, you must understand its components as follows as
Fixed Pay: This includes
- Basic Salary: A fixed amount that forms the base of your CTC.
- Allowances: HRA, conveyance, and medical allowances fall under this category.
Deductions: The following amounts are taken from your Salary
- Employee Provident Fund (EPF): 12% of your basic Salary is deducted for your EPF contribution.
- Professional Tax: This is set by the state government, ranging from ₹200 to ₹2,500 each year.
- Income Tax (TDS): This depends on your total income and applicable tax bracket.
Variable Pay: Performance-linked bonuses or incentives are part of this category. It is not fixed every month.
Perks and Benefits: Non-monetary benefits like insurance premiums, meal coupons, and gratuity are included in your CTC to In Hand Salary but do not directly affect your take-home pay.
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What is In-Hand Salary?
Your In-Hand salary or net Salary is what you take home.
In-Hand Salary = Gross salary – all the deductions
From the above examples, your gross Salary becomes ₹45,000 plus any bonus or gratuity.
Deductions include income tax on Salary and allowances, along with professional Tax. After deductions and contributing 12% to EPF, the in-hand salary would be around ₹40,300.
It is the final amount you see in your bank account at the end of each month. When you file for ITR, you can claim the taxable amount by providing the necessary proof.
Step-by-Step Guide to Calculate In-Hand Salary from CTC
Here is the step-by-step guide on how to calculate your in-hand Salary from the CTC
- First, separate the CTC to In Hand Salary into fixed components, variable pay and non-cash benefits.
- Next you have to determine the elements like allowances and bonuses. These components of CTC are subject to income tax. So identifying it is important to calculate in hand salary
- Deduct professional Tax, PF contribution and estimated income tax ( TDS)
- Exclude non-cash benefits like gratuity and insurance premiums. These are benefits you receive but do not directly impact your monthly income, so exclude them from the in-hand salary calculation.
- Next, you should add monthly reimbursements (if any) that are directly paid.
- Divide the total annual take-home pay by 12 to calculate the average monthly in-hand income.
It gives you a close estimate of what you’ll receive in your bank account.
In-Hand Salary Calculation from CTC Example
Your monthly take-home salary is the amount that remains after deducting all expenses from gross pay.
Let us understand the calculations through some examples.
- Gross Salary: ₹1,000,000
- Deductions:
- Basic Salary (50% of Gross Salary): ₹1,000,000 × 50% = ₹500,000
- Employee Provident Fund (EPF Contribution) – 12% of Basic Salary: ₹500,000 × 12% = ₹60,000
- Professional Tax (average): ₹2,500 (varies by state)
- Income Tax Calculation – India’s 2024-25 (AY 2025-26):
Under the new tax regime, the income tax slabs have changed. These rates are also applicable for the Assessment Year 2025-26. The updated income tax slabs for salaried individuals are given below
New regime ( FY 2024-25)
| Range of Income (Rs.) | Tax Rate |
| Up to 3,00,000 | NIL |
| 3,00,000 – 7,00,000 | 5% |
| 7,00,000 – 10,00,000 | 10% |
| 10,00,000 – 12,00,000 | 15% |
| 12,00,000 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Here is the simple income tax calculation for a salary of ₹10,00,000 under the New Tax Regime for FY 2024-25 (AY 2025-26)
- First ₹3,00,000: No tax (₹0)
- Next ₹4,00,000 (₹3,00,001 – ₹7,00,000): ₹4,00,000 × 5% = ₹20,000
- Next ₹3,00,000 (₹7,00,001 – ₹10,00,000): ₹3,00,000 × 10% = ₹30,000
Total Tax
- ₹0 (for first ₹3,00,000) + ₹20,000 (for next ₹4,00,000) + ₹30,000 (for last ₹3,00,000) = ₹50,000
4. Total Deductions
- Income Tax: ₹50,000
- EPF: ₹60,000
- Professional Tax: ₹2,500
Total Deductions: ₹50,000 + ₹60,000 + ₹2,500 = ₹1,12,500
5. Take-Home Salary
Gross Salary – Total Deductions = ₹1,000,000 – ₹1,12,500 = ₹8,87,500
Final Take-Home Salary: ₹8,87,500
Conclusion
You should understand the method to calculate the in-hand salary from the CTC to In Hand Salary. It helps you in financial planning, avoid confusion, and allows you to assess job offers realistically. Moreover, you should also understand the tax responsibilities, deductions and salary components. It helps you to make informed decisions about salary and take control of your expenses.
FAQs
Q1)How to calculate CTC into in-hand salary?
Subtracts all the deductions, like PF, income tax, and professional tax from CTC to In Hand Salary to calculate the in hand salary. You can also first calculate gross salary and then subtracts deductions to calculate in hand salary.
Q2)What is the in-hand salary from 1.5 LPA CTC?
The in hand salary from 1.5 LPA CTC after minimal deductions will be ₹10,000 to ₹11,000 per month. The exact salary amount depends on the company policies on benefits and deductions, depends on the company’s policies and tax laws.
Q3)How much is 20 lakh CTC in hand salary?
After standard deductions, the monthly in-hand salary may range between ₹1.1 and ₹1.3 lakh. The final amount varies based on the bonus structure and tax liability.
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