CTC vs in-hand salary in India explained (FY 2025-26)

Published 26 October 2026. This note uses the same arithmetic as the in-hand calculator. It is an estimate. It is not a tax filing, not a payroll instruction, and not advice.

Why a CTC figure is not enough

Cost to company can include employer provident fund, gratuity, insurance, or a bonus that never appears as monthly gross on the payslip. The calculator will not split a CTC and will not assume that basic is 40 or 50 percent of gross. You type monthly gross. You type basic only if you want employee PF calculated. If basic is blank, PF stays zero and the note says a split was not assumed.

What the estimate includes

New-regime slabs for FY 2025-26, applied to annual gross minus a standard deduction of ₹75,000 when you mark the income as salary: nil on the first ₹4 lakh, then 5, 10, 15, 20, and 25 percent on each next ₹4 lakh, then 30 percent.

Section 87A is applied so that tax is nil when taxable income is ₹12,00,000 or less. Above that line, tax is the lower of the slab tax and the amount by which taxable income exceeds ₹12,00,000. That second comparison is an approximate marginal relief. Cess is 4 percent of the tax after that step.

Employee PF is 12 percent of the basic you enter. A ceiling, if you tick it, uses only ₹15,000 of basic. Employee ESI is 0.75 percent only when monthly gross is ₹21,000 or less. Professional tax is the annual amount you type, divided by 12. The estimate does not look up a state slab, and it does not treat PF as an 80C deduction.

Worked example at the rebate line

Monthly gross ₹1,00,000. Basic ₹50,000. Marked as salary. PF on, no ceiling, no professional tax.

Annual gross is ₹12,00,000. Taxable income is ₹12,00,000 minus ₹75,000, which is ₹11,25,000. That is at or under ₹12,00,000, so income tax in this estimate is zero.

The slab arithmetic before the rebate is not zero. The first ₹4 lakh is nil, the next ₹4 lakh at 5 percent is ₹20,000, and the remaining ₹3,25,000 at 10 percent is ₹32,500. That is ₹52,500 of slab tax, which the rebate used here brings to zero. Quoting ₹52,500 as the tax would skip the rebate.

Employee PF is 12 percent of ₹50,000, which is ₹6,000. ESI is zero because gross is above ₹21,000. In-hand is ₹1,00,000 minus ₹6,000, which is ₹94,000. No CTC was entered. If someone calls ₹12,00,000 a CTC, this example is still about a payslip gross of ₹1,00,000 a month. Those are different sentences.

Worked example above the rebate

Monthly gross ₹1,50,000. Basic ₹60,000. Same switches: salary, PF on, no ceiling, no professional tax.

Annual gross is ₹18,00,000. Taxable income is ₹18,00,000 minus ₹75,000, which is ₹17,25,000.

Slab tax: ₹4 lakh at nil, ₹4 lakh at 5 percent (₹20,000), ₹4 lakh at 10 percent (₹40,000), ₹4 lakh at 15 percent (₹60,000), and the remaining ₹1,25,000 at 20 percent (₹25,000). The slab total is ₹1,45,000. Taxable income exceeds ₹12,00,000 by ₹5,25,000, which is larger than ₹1,45,000, so the approximate relief does not reduce the slab tax. Cess at 4 percent makes annual tax ₹1,50,800. Monthly tax, rounded, is ₹12,567.

Employee PF is 12 percent of ₹60,000, which is ₹7,200. ESI is zero. In-hand is ₹1,50,000 minus ₹7,200 minus ₹12,567, which is ₹1,30,233.

Again, ₹18,00,000 here is twelve times the monthly gross you typed. It is not a CTC that still contains an employer contribution. If employer PF sits inside the CTC, monthly gross is lower, and you have to know that lower number before you use the calculator.

What to do with a state professional tax

Leave the professional-tax box empty unless you already know the annual deduction. The payroll calculator follows the same rule. West Bengal's employee bands are a separate note, dated with the gazette they come from. Do not paste a slab into either tool and expect the tool to have chosen the state.

Run both examples yourself on the calculator. If a figure here and a figure there disagree, trust the calculator and treat this page as the explanation of the switches, not as a second engine.