Salary Calculation in India: Gross vs. Take-Home.
Your CTC isn't what arrives in your bank account. Understanding the gap between your offer letter and your monthly credit is essential for financial planning.
01. The Take-Home Formula
Gross Salary = Basic + HRA + Allowances
Minus Deductions:
- Employee PF Contribution (12% of Basic)
- Professional Tax (State Dependent)
- Income Tax (TDS)
02. Key Salary Components
Basic Pay
Usually 40-50% of your CTC. It's the fully taxable core of your salary and determines your PF and Gratuity amounts.
HRA (House Rent Allowance)
Calculated as 50% of basic (Metro) or 40% (Non-metro). You can claim tax exemptions on this if you pay rent.
EPF (Provident Fund)
A mandatory 12% deduction from your basic pay toward your retirement fund. Your employer matches this amount.
03. Statutory Deductions
| Deduction | Average Amount (Monthly) |
|---|---|
| Professional Tax | ₹200 – ₹250 (Varies by State) |
| Income Tax (TDS) | Based on your Tax Slab |
| Health/Group Insurance | Employer specific (Optional) |
The 2026 CTC Trap
Be careful with 'Flexible Benefit Plans' (FBP). Many companies include Employer PF and Gratuity in the CTC. While this looks good on paper, it significantly reduces the cash-in-hand. Always ask for a "Take-home sheet" before signing an offer letter.