From CTC to in-hand
| Step | What's deducted |
|---|---|
| CTC | Total cost to company |
| − Employer components | Employer PF (12% of basic), gratuity (≈4.81% of basic), insurance, variable pay not yet paid |
| = Gross salary | What appears as earnings on the payslip |
| − Employee PF | 12% of basic + DA (or of the wage ceiling if opted) |
| − Professional tax | State levy, up to ₹2,500 a year |
| − Income tax (TDS) | Per regime chosen |
| = Take-home | Credited to your bank account |
What the Labour Codes changed
The four Labour Codes, in force from 21 November 2025, define 'wages' so that allowances excluded from it can't exceed 50% of total remuneration. Where basic salary was kept low, the excess is added back for PF and gratuity, which can raise those contributions and reduce in-hand pay while increasing long-term savings.
Worked example: ₹15 lakh CTC, new regime
- 1Basic ₹6,00,000. Employer PF ₹72,000 and gratuity ₹28,860 are part of CTC → gross salary ≈ ₹13,99,140.
- 2Employee PF ₹72,000; professional tax ₹2,500.
- 3Tax: ₹13,99,140 − ₹75,000 standard deduction = ₹13,24,140 taxable → tax ≈ ₹78,621 + cess ≈ ₹81,766.
- 4Take-home ≈ ₹13,99,140 − ₹72,000 − ₹2,500 − ₹81,766 = ₹12,42,874 a year.
About ₹1.03 lakh a month in hand.
