CTC, gross and in-hand salary: what each one means
The three salary figures on every Indian offer letter, worked through for FY 2026-27: what CTC includes, how gross salary is reached, and what is deducted before your in-hand pay.
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An Indian offer letter can describe the same job with three different numbers. They are not interchangeable, and the gap between the first and the last is what surprises most people in their first month.
- CTC, cost to company, is everything your employer spends on you in a year, including money that never reaches your bank account.
- Gross salary is what is paid through payroll before deductions: Basic, HRA, special allowance and other allowances.
- In-hand salary, also called take-home or net pay, is what is actually credited each month, after your provident fund, professional tax and income tax.
From CTC to in-hand, step by step
A 12 LPA offer with the calculator's standard structure: Basic at half of CTC, PF at the wage ceiling, gratuity and employer PF counted inside CTC, Karnataka professional tax and the new tax regime. All figures are for the year.
| Step | A year | Where it goes |
|---|---|---|
| CTC | ₹12,00,000 | |
| Employer PF | −₹29,360 | Into your PF account and pension |
| Gratuity provision | −₹28,846 | Paid only if you leave after qualifying |
| Gross salary | ₹11,41,794 | |
| Your PF | −₹29,360 | |
| Professional tax | −₹2,500 | |
| Income tax | ₹0 | None: within the ₹12 lakh rebate |
| In hand | ₹11,09,934 |
So a 12 lakh CTC becomes ₹11,41,794 of gross salary and ₹11,09,934 in hand, or ₹92,494 a month. The employer PF and gratuity are still yours, but as savings you reach later, not as salary.
The gap at different salaries
The same structure at other salaries. Below about ₹12 lakh, provident fund and gratuity make up most of the gap; above it, income tax takes over.
| CTC | Gross a month | Deducted a month | In hand a month | Share of CTC in hand |
|---|---|---|---|---|
| 5 LPA | ₹37,811 | ₹2,542 | ₹35,269 | 85% |
| 8 LPA | ₹62,617 | ₹2,655 | ₹59,962 | 90% |
| 12 LPA | ₹95,149 | ₹2,655 | ₹92,494 | 92% |
| 15 LPA | ₹1,19,549 | ₹9,930 | ₹1,09,619 | 88% |
| 20 LPA | ₹1,60,214 | ₹17,346 | ₹1,42,867 | 86% |
| 30 LPA | ₹2,41,544 | ₹39,667 | ₹2,01,877 | 81% |
| 50 LPA | ₹4,04,204 | ₹90,417 | ₹3,13,787 | 75% |
"Deducted" is your own PF, any ESI, professional tax and income tax. The share of CTC also counts the employer PF and gratuity that never pass through your payslip.
Variable pay is not part of your monthly salary
Many offers put part of the CTC into a performance bonus or variable pay. It is carved out of the same CTC, so it lowers the monthly figure, and it is paid once or twice a year only if targets are met.
At 15 LPA with 10% variable pay (₹1,50,000 a year), the monthly in-hand falls from ₹1,09,619 to ₹97,119. If the bonus is paid in full, the year's total is the same, ₹13,15,427; you just receive ₹12,500 a month later, as a lump sum. If it is not paid, that money is gone. When you compare offers, compare the fixed part.
What else can sit inside a CTC
Some employers also count things the calculator does not model, such as a joining or retention bonus, insurance premiums, meal cards or a company car. None of them changes your monthly in-hand, and a one-time bonus makes the first year's CTC look larger than every year after it. Ask for a component-wise breakdown before you compare.
Comparing two offers
- Compare monthly in-hand on the fixed pay, then add the variable part at the rate it has actually been paid.
- Check whether employer PF and gratuity are inside each CTC. An offer that pays them on top is worth more than the same CTC with them inside.
- Check whether PF is on the wage ceiling or on full Basic. Full-Basic PF lowers in-hand but saves much more; see the provident fund guide.
- Put both offers into the calculator and use its share link to keep each result, so you can open them side by side.
The method page lists every rate and source behind these numbers.