Salary management calculator

How CTC turns into monthly in-hand

CTC is what the employer spends in a year. It usually includes basic, HRA, special allowance, employer provident fund, gratuity (if the offer shows it inside CTC) and sometimes group insurance. Monthly in-hand sits lower than CTC divided by twelve, because employer PF and gratuity do not pay out as cash each month, and because income tax, employee PF and professional tax come off the gross taxable salary before it reaches the bank.

The page reaches in-hand in three steps. First it splits CTC into components using your basic per cent, HRA per cent and the PF mode, and derives special allowance as the residual. Second it applies the FY 2026-27 tax slabs, standard deduction and (for the old regime) the deductions you enter. Third it subtracts income tax, employee PF and professional tax from the gross taxable salary and divides by twelve.

The components a payslip actually shows

Basic pay is the anchor of the structure. PF, gratuity and in many firms the special allowance move with basic. A higher basic raises PF contributions and the gratuity accrual, which cuts take-home today while adding to retirement balances. A lower basic lifts take-home but shrinks the PF and gratuity carried forward.

HRA is a cash line each month and, under the old regime, partially exempt from income tax if the reader pays rent. The exemption is the least of actual HRA, rent paid minus 10 per cent of basic, and 50 per cent of basic for one of the eight 50 per cent HRA cities or 40 per cent for any other city. Employer PF is 12 per cent of the PF base, with half a per cent of EDLI on top, and sits inside CTC. The PF base is the smaller of basic and the EPFO wage ceiling of ₹25,000 per month (that is, ₹3,00,000 per year), or full basic, depending on what the employer has chosen.

Worked example a reader can check

A reader enters a CTC of ₹15,00,000 with basic 50 per cent of CTC, HRA 40 per cent of basic, employer PF capped at the ₹25,000 wage ceiling, gratuity inside CTC, employee PF 12 per cent, professional tax ₹2,500, and the new regime. The page computes: basic ₹7,50,000; HRA ₹3,00,000; employer PF 12 per cent of ₹3,00,000 equals ₹36,000; gratuity 4.81 per cent of ₹7,50,000 equals ₹36,075; special allowance (the residual) ₹3,77,925.

Switching this reader to the old regime with rent ₹25,000 per month in a 50 per cent HRA city gives an HRA exemption of ₹2,25,000 (the lower of ₹3 lakh HRA, ₹3 lakh rent minus 10 per cent of basic, and 50 per cent of basic of ₹3.75 lakh). Taxable income becomes ₹11,52,925 and the tax with cess works out to about ₹1,64,713. Monthly in-hand on these inputs is about ₹1,02,059. The regime that gives lower tax depends on your deductions, and the page prints both as arithmetic.

Provident fund, capped or on full basic

The Employees' Provident Fund Organisation (EPFO) sets a statutory wage ceiling of ₹25,000 per month with effect from 17 September 2026, under S.O. 5109(E) of that date; the earlier ceiling was ₹15,000 per month from 1 September 2014 to 16 September 2026. On the new ceiling, employer EPF is capped at 12 per cent of ₹25,000, or ₹3,000 per month (equivalently ₹36,000 per year). The employer may contribute on full basic instead, in which case the same 12 per cent applies to the full basic figure.

The 8.33 per cent EPS share of employer PF is capped at ₹2,082.50 per month (8.33 per cent of ₹25,000) by regulation, and any employer PF above that cap goes into EPF. Existing higher-wage arrangements continue. The arithmetic here is on the EPF side only; the EPS pension is a separate formula.

HRA exemption and the 50 per cent city list

HRA exemption under the old regime is the least of three figures: actual HRA received, rent paid in the year minus 10 per cent of basic, and 50 per cent of basic if the reader lives in one of the eight 50 per cent HRA cities, or 40 per cent for any other city. The Income-tax Rules 2026 list, as reported in secondary legal summaries, carry eight cities at 50 per cent for FY 2026-27: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Every other city is 40 per cent.

The page therefore offers two select options, one for the eight 50 per cent cities and one for any other city. Under the new regime the exemption is not available at all, so the rent paid and the city select have no effect on the tax figure in the new regime.

Professional tax, gratuity and the Labour Codes

Professional tax is a State tax levied by the State's commercial taxes department; Article 276(2) of the Constitution caps the annual total at ₹2,500 per person. The actual slab depends on the State and the salary band. The page accepts an annual figure up to the cap; a number above the cap is clamped to ₹2,500 and a note explains the cap.

Gratuity inside CTC uses the 4.81 per cent approximation of the statutory formula (last basic multiplied by 15 divided by 26 divided by 12). It is an accrual inside CTC, not a monthly cash line. With the Labour Codes active from 21 November 2025, section 2(88) of the Code on Social Security 2020 widens the wage definition so that excluded allowances above 50 per cent of total remuneration count as wages for PF and gratuity. This can raise PF and gratuity for a reader whose pay has a high special-allowance share. The 50 per cent wage rule is mentioned here as in force; the page does not re-model PF or gratuity to the new base, because the actual re-mapping sits with the employer.

Budget split: three rows the reader sets

Once the monthly in-hand is known, where it goes is a personal choice. The budget rows at the end of the input list let the reader set three heads with their own labels (Needs, Wants and Savings by default) and their own per cent each. The page normalises the three percentages so they sum to 100 per cent of the in-hand, then multiplies to give monthly rupees under each head.

This is the reader's own split. The page does not call any specific split a rule to follow. A reader with large EMIs will set Needs higher than someone living with family. A reader pulling towards a corpus target will push Savings up. Two readers with the same in-hand can run very different splits without any of them being wrong on the arithmetic.

What this calculator does not do

• It does not model variable pay, joining bonus or long-term incentive plans. Enter only the fixed annual CTC that recurs each year.
• It does not compute the tax effect of capital gains, dividends above the TDS threshold, or any special-rate head. Those use the income tax calculator companion workflow.
• It does not compute food coupons, LTA, or NPS employer top-up within CTC. For NPS planning use the NPS calculator.
• It does not apply the new Labour Codes 50 per cent wage rule to re-map your PF or gratuity; that depends on your employer's salary-structure change.
• It does not include employer group insurance premiums, which some firms show inside CTC and some outside.

Frequently asked questions

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