How CTC is Calculated in India

Calculate your exact in-hand salary instantly using the CTC Calculator. Understand HRA exemption — a key CTC component — with the HRA Exemption Calculator. Check professional tax by state since it affects your take-home.

CTC stands for Cost to Company — the total amount an employer spends on an employee in a year. It is not your take-home salary. Understanding what's inside your CTC helps you negotiate better and plan your finances accurately.

Components of CTC — Explained

1. Basic Salary

The core fixed component of your salary. Typically 40–50% of CTC for most Indian companies. All other components — HRA, PF, gratuity — are calculated as a percentage of basic salary. A higher basic increases PF deduction and gratuity but also gives you more HRA exemption.

2. House Rent Allowance (HRA)

Usually 40–50% of basic salary (50% for metro cities, 40% for non-metros). HRA is partially tax-exempt under Section 10(13A) in the Old Tax Regime based on rent paid. If you don't pay rent, the full HRA is taxable income.

3. Special Allowance / Flexible Benefit Plan

The balancing figure that makes up the rest of CTC after all standard components. Fully taxable. Some companies offer this as a Flexible Benefit Plan (FBP) where employees can claim reimbursements for LTA, meal vouchers, phone bills, etc.

4. Employee Provident Fund (EPF) — Employee Share

12% of basic salary (capped at ₹1,800/month if basic exceeds ₹15,000). This is deducted from your in-hand salary every month and deposited into your EPF account. Earns 8.15–8.25% annual interest (declared by EPFO). Exempt from tax at maturity.

5. Employer PF Contribution

Your employer also contributes 12% of your basic to EPF — but this is included in your CTC, not an addition to it. Of the employer's 12%: 8.33% goes to EPS (Employee Pension Scheme, capped at ₹1,250/month) and 3.67% goes to EPF.

6. Gratuity

A statutory benefit payable after 5 years of continuous service. Calculated as: (Basic + DA) × 15/26 × years of service. Most companies include a provision of approximately 4.81% of basic salary per year in CTC as gratuity. It is paid as a lump sum when you leave after 5+ years.

7. Bonus / Performance Incentive

Variable pay linked to individual or company performance. Can range from 5% to 30%+ of CTC. Often guaranteed for the first year and variable thereafter. Statutory Bonus under the Payment of Bonus Act (for employees earning up to ₹21,000/month basic) is 8.33% to 20% of basic.

8. Other Benefits

May include: health insurance premium (employer-paid), group term life insurance, food allowance / meal card (Sodexo), transport allowance, Leave Travel Allowance (LTA), National Pension System (NPS) employer contribution.

Real Example: ₹10 LPA CTC Breakdown

Here's how a typical ₹10,00,000 annual CTC is structured for a salaried employee in Bangalore (metro):

Now — what's the in-hand monthly salary?

*Actual in-hand varies based on tax regime, actual rent paid, investments, and other deductions. Use the calculator below for your exact amount.

Why is CTC Always Higher Than In-Hand?

The difference between CTC and in-hand salary comes from two types of deductions:

• Employer-side components included in CTC but not paid to you: Employer PF (12% of basic) and gratuity provision (~4.81% of basic) are paid by the company on your behalf — into EPF and a gratuity fund — not into your bank account.
• Employee-side deductions from your salary: Employee PF (12% of basic), professional tax (up to ₹200/month depending on state), and income tax (TDS deducted monthly) all reduce your in-hand amount.

Gross Salary vs CTC vs In-Hand — The Difference