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A CTC figure is not what lands in your bank account. Enter your annual cost to company to estimate monthly in-hand pay after provident fund, gratuity, professional tax and income tax, under either the new or the old regime.

How to use this calculator

  1. Enter your annual CTC from the offer letter.
  2. Set basic pay as a percentage of CTC; your offer letter or payslip will show it, and 40% to 50% is common.
  3. Choose the tax regime you have opted for.
  4. Adjust PF treatment, gratuity and professional tax if your employer handles them differently.

Formula

In-hand = CTC − Employer PF − Gratuity − Employee PF − Professional tax − Income tax − Other deductions

Employer PF
employer's provident fund contribution, part of CTC but not paid to you monthly
Gratuity
provision of about 4.81% of basic pay, payable only after five years of service
Employee PF
your own 12% contribution, deducted from gross salary
Income tax
tax on taxable income after the applicable regime's deductions, plus 4% cess

Gross salary is CTC minus employer PF and gratuity. Take-home is gross salary minus your deductions.

Worked example

A CTC of ₹12,00,000 with basic at 50%, PF capped at the ₹25,000 wage ceiling, gratuity included, ₹2,400 professional tax and the new regime.

  1. Basic pay50% of 12,00,000 = ₹6,00,000
  2. Employer PF12% of ₹25,000 × 12 = ₹36,000
  3. Gratuity provision4.81% of 6,00,000 = ₹28,860
  4. Gross salary12,00,000 − 36,000 − 28,860 = ₹11,35,140
  5. Employee PF₹36,000
  6. Income tax₹0 (taxable income is within the new-regime rebate)

Annual take-home is ₹11,35,140 − ₹36,000 PF − ₹2,400 professional tax = ₹10,96,740, or about ₹91,395 a month. Under the old ₹15,000 ceiling it would have been about ₹93,795, because both PF shares come out of the same CTC. Enter your own numbers above for a figure specific to your offer.

Why CTC and take-home differ so much

CTC is everything your employer spends on you in a year. Several parts of it never reach your monthly account: the employer's provident fund contribution goes into your PF account, gratuity is a provision you only receive after five years of service, and some companies include insurance premiums or meal card values.

What remains is gross salary. From that, your own PF share, professional tax and income tax are deducted before the balance is paid to you.

How provident fund is calculated

The statutory rule is 12% of basic pay plus dearness allowance from the employee and a matching 12% from the employer, up to a monthly wage ceiling. From 17 September 2026 that ceiling is ₹25,000, raised from ₹15,000, so a capped contribution is now up to ₹3,000 a month from each side instead of ₹1,800.

Employers differ on how they apply the ceiling. Some restrict PF to 12% of ₹25,000. Others calculate 12% of your full basic pay, which increases both contributions and lowers take-home further. If your basic is below ₹25,000 a month, PF is simply 12% of your actual basic either way.

Out of the employer's 12%, 8.33% of wages up to the ceiling (up to about ₹2,083 a month) goes to the Employees' Pension Scheme and the rest to your PF account. This changes the split, not the total, so your CTC breakdown stays the same.

Use the provident fund option above to match whichever approach your employer follows. Your own contribution reduces take-home pay but is still your money; it earns interest and is withdrawable under the scheme's rules.

New regime and old regime

The new regime has wider slabs and lower rates but almost no exemptions. The old regime has higher rates but allows HRA exemption, deductions under Section 80C, 80D and others. Which one leaves you better off depends entirely on how much you can legitimately claim.

If you have a home loan, pay significant rent, and use the full 80C limit, the old regime can still win. If you claim little, the new regime is usually simpler and cheaper. The income tax calculator works out both side by side with your actual deductions.

How to reduce income tax in the new regime

The new regime removes most deductions, so buying tax-saving investments does nothing here. What still works is how your CTC is structured, which your HR or payroll team can change at the start of the year. The calculator above shows how much each of these would save on your salary.

  • Employer NPS contribution: up to 14% of basic pay paid into NPS by your employer is tax-free. Your CTC stays the same; the money is invested for retirement and is mostly locked until 60.
  • Meal vouchers or meals at work: tax-free up to ₹200 a meal from Tax Year 2026-27, in both regimes. A cash food allowance is fully taxed.
  • Gifts and vouchers from your employer: tax-free up to ₹15,000 a year.
  • Company car or car lease: when the employer provides the car, only a fixed amount (₹5,000 a month for a car up to 1.6 litres or electric, with running costs paid) is added to your income instead of the full cost.
  • Reimbursements for work expenses, such as official travel, phone or internet bills, are not income when supported by bills.
  • Stay within ₹12 lakh of taxable income if you are close: with the ₹75,000 standard deduction, a salary up to ₹12.75 lakh pays no tax.

How to reduce income tax in the old regime

The old regime rewards saving and spending on specific things. Claim only what you would do anyway: below ₹50 lakh of income a deduction saves at most 31.2% of the amount (30% slab plus 4% cess), so the rest is still your money that you are locking away or spending.

  • 80C, now Section 123, up to ₹1.5 lakh: your own PF already counts. ELSS tax-saving mutual funds have the shortest lock-in at 3 years. PPF, life insurance premiums, children's tuition fees, 5-year tax-saver FDs and home loan principal also qualify.
  • Your own NPS contribution: up to ₹50,000 more, on top of 80C.
  • Health insurance: up to ₹25,000 for your family and another ₹25,000 for parents, ₹50,000 each for senior citizens.
  • HRA exemption if you live on rent. Keep monthly rent receipts and your landlord's PAN if rent is above ₹1 lakh a year.
  • Home loan interest on a house you live in: up to ₹2 lakh a year.
  • Employer NPS up to 10% of basic, education loan interest, and donations to approved charities.

Professional tax

Professional tax is levied by state governments, not the centre. States that charge it generally cap it at ₹2,500 a year, and several states do not levy it at all. Enter the figure that appears on your payslip, or zero if your state does not charge it.

Things to keep in mind

  • This is an estimate for planning, not an official Income Tax Department or payroll calculation.
  • It assumes a resident individual below 60 whose only income is salary, and no mid-year job change.
  • Variable pay, bonuses and joining bonuses are taxed when paid and can change your monthly TDS considerably.
  • Your employer computes TDS from your investment declarations, so the monthly deduction may vary through the year.

Frequently asked questions

Why is my in-hand salary so much lower than CTC divided by twelve?

Because CTC includes amounts you never receive monthly, such as the employer's PF contribution and the gratuity provision, and because PF, professional tax and income tax are deducted from what remains. On a ₹12 lakh CTC the gap is often ₹14,000 or more per month.

Should I choose the new or the old tax regime?

It depends on your deductions. The new regime has lower rates and a higher rebate threshold but almost no exemptions; the old regime rewards rent, home loan interest and 80C investments. Calculate both with your real figures rather than following a rule of thumb.

What is the PF wage ceiling in 2026?

₹25,000 a month, effective 17 September 2026 under notification S.O. 5109(E). It was ₹15,000 before that. The maximum mandatory contribution is now 12% of ₹25,000, which is ₹3,000 a month each from you and your employer. For September 2026, the old ceiling applies to 1–16 September and the new one from 17 September.

Why did my in-hand salary drop after September 2026?

If your basic pay is above ₹15,000 a month and your employer caps PF at the ceiling, your own PF deduction rises from up to ₹1,800 to up to ₹3,000 a month. When your CTC is fixed, the employer's matching increase also comes out of it, so take-home can fall by up to ₹2,400 a month. That money goes into your PF and pension savings rather than being lost.

Does a higher basic pay increase or reduce take-home?

A higher basic pay usually reduces monthly take-home, because PF and gratuity are both calculated on basic. It also increases your retirement savings and gratuity entitlement, so it is not simply a loss.

Does investing in mutual funds save income tax?

Only ELSS tax-saving funds, and only in the old regime. Up to ₹1.5 lakh a year counts under 80C along with PF, PPF and insurance, and each investment is locked for 3 years. In the new regime no mutual fund reduces tax. Gains on equity funds held over a year are taxed at 12.5% above ₹1.25 lakh a year.

How can I save tax in the new regime?

Mainly by restructuring your CTC with your employer: employer NPS up to 14% of basic pay, meal vouchers up to ₹200 a meal, gifts up to ₹15,000 a year and a company-provided car. Investments such as ELSS, PPF and insurance premiums do not reduce tax in the new regime.

Which tax year does this calculator use?

It uses the income tax slabs for Tax Year 2026-27. The rules are stored separately from the calculator so they can be updated quickly after each Budget.

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