- CTC is the employer’s cost, not your income. Compare offers on monthly in-hand pay, then subtract what each city costs you.
- In our example, ₹24 lakh in Mumbai beats ₹20 lakh in Bengaluru by only ₹3,315 a month once rent is paid. If the variable pay comes in at 60%, the smaller offer wins.
- Treat joining bonuses as one-off and ESOPs as uncertain. Run the comparison once with ESOPs at zero. In our startup example, that single change swings the four-year result by over ₹12 lakh.
- Look three or four years ahead, not just at year one. Raises compound, and so do rents.
Two offers on the table feels like the good kind of problem, until you try to compare them. One has a bigger CTC. The other has ESOPs and a joining bonus. One is in a cheaper city. And every recruiter is selling you their number.
The trick is to stop comparing the numbers you are given and turn both offers into the same thing: money left in your account at the end of each month. Here is how, step by step.
Why CTC is the wrong number to compare
CTC means “cost to company”. It is everything your employer spends on you in a year, and a good part of it never reaches your bank account as monthly salary:
- Employer PF and gratuity: real money for you, but locked away. Gratuity is paid only if you stay five years.
- Variable pay: a target, not a promise. It depends on your rating and the company’s year.
- Joining bonus: paid once, and often clawed back if you leave within a year.
- ESOPs or RSUs: paper value that vests over years and, at a private company, may not be sellable for a long time.
- Insurance and perks: valued at whatever the company pays for them.
Two offers with the same CTC can easily differ by thousands of rupees a month in take-home. So the first step is to strip each one down to cash.
Step 1: Turn each offer into monthly in-hand pay
Let’s take a common dilemma: ₹20 lakh in Bengaluru with 10% variable pay, against ₹24 lakh in Mumbai with 20% variable pay. After PF, professional tax and income tax (the new regime wins for both), the monthly take-home is:
A gap of about ₹22,000 a month. So far, Mumbai looks like the clear winner. Now for the part offer letters leave out.
Step 2: Subtract what each city costs you
Say a similar flat costs ₹28,000 a month in Bengaluru and ₹45,000 in Mumbai, and commuting and other city costs are ₹4,000 and ₹6,000. Take those away and look at what is left:
A ₹4 lakh higher CTC shrinks to an edge of about ₹40,000 a year. Your rent assumptions decide almost everything here, so use real listings for the areas you would actually live in.
Open this comparison →Step 3: Ask what the variable pay really pays
The Mumbai offer has twice the variable share. If the company’s bonus pool has paid out about 60% of target in recent years, which is worth asking HR or future colleagues about, the picture flips:
Negotiation tip: if you prefer an offer but its variable share is high, ask to move part of the variable into fixed pay. It is often easier for a company to agree to that than to raise the CTC.
Step 4: Separate one-off money and paper money
Startups often close the gap with a joining bonus and ESOPs. Both are worth something, but neither is the same as salary. Consider ₹18 lakh at a startup with a ₹1.5 lakh joining bonus and ESOPs valued at ₹4 lakh a year, against ₹22 lakh at a large company, same city and same rent.
The ESOPs are the whole difference. Before you count them, find out the vesting schedule (most have a one-year cliff), the strike price, whether the company has ever let employees sell, and what happens to unvested options if you leave.
Open this comparison →A sensible way to decide: the startup should still be attractive to you with its ESOPs at zero, for reasons like the role, the learning or the pace. Then the ESOPs are an upside, not a bet you need to win.
Step 5: Look three or four years ahead
Year one is a snapshot. Each offer’s pay rises with its raises, and your rent rises too. In our Bengaluru vs Mumbai example with full variable pay and 8% raises on both sides, Mumbai’s lead grows to about ₹1.49 lakh over four years. That is real money, but it is also smaller than one disappointing bonus year.
If one company is known for bigger raises or faster promotions, give it a higher yearly raise in the comparison and see how much it matters. You will often find that a higher growth rate beats a higher starting CTC within two or three years.
What a calculator can’t price, but you can
Some differences don’t show up in CTC but do cost money. Turn them into monthly rupees and add them to “other costs”:
- Work from home: three office days a week instead of five can save a real commute cost.
- Health cover for parents: if one employer covers them and the other doesn’t, add the premium you would pay yourself.
- Notice period and bond: a 90-day notice period or a training bond limits your next move.
- Basic pay share: a higher basic means more PF and gratuity for later, but a slightly lower take-home today.
And some things are worth paying for: a better manager, a stronger team or a skill that raises your next salary. A good comparison doesn’t make the decision for you. It tells you the price of the choice you prefer.
Frequently asked questions
How do I compare two job offers with different CTCs?
Convert each to monthly in-hand pay after PF and tax, subtract the rent and living costs in each city, and compare what is left. Then adjust for variable pay you may not receive, one-off bonuses and ESOPs, and look at three or four years with raises.
Is a higher CTC always better?
No. A higher CTC in a more expensive city, or one with a large variable component, can leave you with less each month. In our example a ₹4 lakh higher CTC was worth only ₹3,315 a month after rent.
How should I value ESOPs in a job offer?
Cautiously. Check the vesting schedule, strike price, cliff and whether employees have ever been able to sell. Compare the offers once with the ESOPs at zero to see how much your decision depends on them.
Is a joining bonus taxable?
Yes, it is taxed as salary in the year you receive it. Many offers also require you to repay it if you leave within a set period, usually a year.
Got two offers right now?
Enter both and see which one leaves more in your account after rent, tax and time.
Compare my offers →Examples use the job offer comparison with its default salary structure and the better tax regime for each offer, Tax Year 2026-27. Rents, payouts and raises are assumptions. Your offer letter and payslip are the final word.