CTC (Cost to Company) is what an employer spends on you in a year. In-hand salary is what reaches your bank account. They are rarely close, and the gap surprises many new joiners.
What sits inside CTC
- Basic salary: usually 40–50% of CTC; PF and gratuity are calculated on it.
- HRA and allowances: cash paid monthly; HRA may be partly tax-exempt in the old regime.
- Employer PF: 12% of basic, deposited to your PF account, not paid in cash.
- Gratuity: about 4.81% of basic, payable only when you leave after 5 years.
- Variable pay / bonus: paid periodically, often subject to performance.
From ₹12 lakh CTC to monthly in-hand
| Step | Yearly amount |
|---|---|
| Annual CTC | ₹12,00,000 |
| Employer PF (12% of ₹4,80,000 basic) | −₹57,600 |
| Gratuity (4.81% of basic) | −₹23,088 |
| Gross salary paid in cash | ₹11,19,312 |
| Employee PF | −₹57,600 |
| Professional tax (Karnataka: ₹200 × 11 + ₹300) | −₹2,500 |
| Income tax (new regime, rebate applies) | ₹0 |
| Yearly in-hand | ₹10,59,212 |
| Monthly in-hand | ₹88,268 |
So a ₹12 lakh CTC becomes about ₹88,268 a month, or 88% of CTC. At higher incomes, income tax takes a bigger share, so the percentage falls. See every CTC on our salary by CTC chart.
How to compare two job offers
Never compare CTC alone. Compare monthly in-hand pay, the share that is variable, your rent in each city, and any joining bonus or ESOPs. Our offer comparison tool does this side by side.
Frequently asked questions
Why is in-hand salary lower than CTC divided by 12?
Because CTC includes money that is never paid to you monthly, such as employer PF and gratuity, and because your own PF, professional tax and income tax are deducted before payout.
Is employer PF part of CTC?
Usually yes. Employers typically count their 12% PF contribution inside CTC, so it reduces the gross salary you receive in cash.
Does variable pay reduce my monthly in-hand?
Variable pay is part of CTC but is paid quarterly or annually and only if targets are met, so your fixed monthly pay can be lower than the total suggests.