When you receive a job offer in India, the quoted figure is your CTC (Cost to Company) — not the amount you actually take home. The gap between CTC and in-hand salary can be surprisingly large, sometimes 25–35% less than expected. Understanding this breakdown is essential for budgeting, negotiating offers, and financial planning.

CTC breakdown: What your employer actually pays

Your CTC typically includes these components: Basic Salary (usually 40–50% of CTC), House Rent Allowance (HRA), Special Allowances, Employer PF contribution (12% of Basic), Gratuity, Medical Insurance, and sometimes Performance Bonuses. Only a subset of these directly hits your bank account.

Step-by-step deduction walkthrough

1. Start with your Gross Salary (CTC minus employer PF, gratuity, and insurance premiums).:
2. Subtract Employee PF: 12% of your Basic Salary is deducted as your PF contribution. On a ₹30,000 Basic, this is ₹3,600/month.
3. Subtract Professional Tax: This varies by state — Maharashtra charges ₹200/month, Karnataka charges ₹200/month, while some states have no professional tax.
4. Calculate Income Tax (TDS): Apply the applicable tax slab (Old or New Regime) to your taxable income after deductions under 80C, 80D, HRA exemption, and standard deduction of ₹50,000.
5. The remaining amount after all deductions is your monthly take-home salary.:

Old Regime vs New Regime: Which saves more tax?

The New Tax Regime (default from FY 2023-24) offers lower slab rates but eliminates most deductions like 80C, HRA, and LTA. The Old Regime has higher rates but allows deductions up to ₹1.5 lakh under 80C, ₹25,000–₹50,000 under 80D, plus HRA exemptions. If your total deductions exceed ₹3.75 lakh, the Old Regime typically saves more tax. Below that threshold, the New Regime is usually better.

Practical example: ₹12 LPA CTC

For a ₹12 LPA CTC with 50% Basic: Basic = ₹50,000/month, HRA = ₹25,000, Special Allowance = ₹12,500, Employer PF = ₹6,000, Gratuity = ₹2,400, Insurance = ₹4,100. Gross monthly = ₹87,500. After Employee PF (₹6,000), Professional Tax (₹200), and TDS (~₹5,800/month under New Regime), your take-home is approximately ₹75,500/month or about ₹9.06 LPA — roughly 75% of your CTC.

Remember to factor in variable components like annual bonuses, RSUs (restricted stock units), and reimbursements when comparing job offers. Two offers with the same CTC can have vastly different monthly take-home amounts depending on their salary structure.