You received a job offer of ₹10 LPA (₹10 Lakh Per Annum) but your first salary credit shows only ₹66,000. Where did the remaining ₹17,000 go? This guide explains every single deduction from your CTC and how to calculate your exact take-home salary.
CTC stands for Cost to Company — it is the total annual expenditure a company makes for an employee. This includes your basic salary, allowances, provident fund contributions, gratuity, insurance and all other benefits. CTC ≠ In-hand salary.
This is the fixed base pay. Usually 40–50% of CTC in private sector and 50–60% in government jobs. All other allowances are calculated as a percentage of basic salary. Higher basic = higher PF deduction but also higher HRA and gratuity.
HRA is given to cover rent expenses. If you live in a metro city (Delhi, Mumbai, Kolkata, Chennai) you get 50% of basic as HRA. Non-metro employees get 40%. HRA is partially or fully tax-exempt if you pay rent — use our HRA Calculator to find your exact exemption.
This is the remaining CTC after all other components. It is fully taxable. Many companies include variable pay or performance bonus here.
Your employer contributes 12% of your basic salary to your EPF account every month. This is part of your CTC but you don't receive it in hand — it goes directly to your PF account. You get this money only on retirement or resignation.
Gratuity is a retirement benefit payable after 5 years of service. It is part of CTC but you only receive it when you leave the company. Use our Gratuity Calculator to estimate your amount.
You contribute 12% of your basic salary to EPF every month. This is deducted before you receive your salary. The good news — this builds your retirement fund and qualifies for 80C tax deduction.
State-level tax of ₹200/month (₹2,400/year) in most states. Maharashtra, Karnataka, Telangana and most other states charge this. Some states like Delhi and Rajasthan don't have professional tax.
Your employer deducts TDS monthly based on your estimated annual income. Under FY 2025-26 New Regime, income up to ₹12 Lakh has zero tax due to the enhanced Section 87A rebate.
Here's exactly how a ₹10,00,000 annual CTC breaks down for a non-metro city employee under the new tax regime:
| Component | Annual (₹) | Monthly (₹) | Notes |
|---|---|---|---|
| Basic Salary | 5,00,000 | 41,667 | 50% of CTC |
| HRA | 2,00,000 | 16,667 | 40% of Basic (Non-metro) |
| Special Allowance | 1,39,600 | 11,633 | Remaining component |
| Employer PF | 60,000 | 5,000 | 12% of Basic — goes to PF |
| Gratuity | 24,038 | 2,003 | 4.81% of Basic — future benefit |
| Gross Salary (what you see) | 70,000 | Before deductions | |
| DEDUCTIONS ↓ | |||
| Employee PF (12% of Basic) | -60,000 | -5,000 | Goes to your PF account |
| Professional Tax | -2,400 | -200 | State tax |
| Income Tax (TDS) | 0 | 0 | Zero tax up to ₹12L (New Regime 2025-26) |
| 💰 Monthly In-Hand Salary | ₹64,800 | What hits your bank | |
The biggest change in FY 2025-26 is the New Tax Regime — zero tax up to ₹12 Lakh income. This means most employees earning up to ₹12 LPA pay zero TDS, significantly increasing take-home salary.
| Annual Salary | New Regime Tax | Old Regime Tax (with 80C) | Which is Better? |
|---|---|---|---|
| ₹8 LPA | ₹0 (zero!) | ₹46,800 | New Regime |
| ₹10 LPA | ₹0 (zero!) | ₹70,200 | New Regime |
| ₹12 LPA | ₹0 (zero!) | ₹93,600 | New Regime |
| ₹15 LPA | ₹93,600 | ₹1,31,040 | New Regime |
| ₹20 LPA (high deductions) | ₹2,34,000 | ₹1,87,200 | Old Regime (if HRA+80C high) |
For most people earning under ₹15 LPA, the New Regime now gives higher take-home. Use our Income Tax Calculator to compare both regimes for your exact salary.
If you pay rent, submit rent receipts to your employer. This can reduce your TDS significantly. Even paying rent to parents is legally valid. Check our HRA Calculator for your exact exemption.
If you're in Old Regime, ensure you invest ₹1.5L/year in ELSS, PPF, or life insurance to fully claim 80C. Don't let this benefit go unused.
Ask HR if they can restructure your CTC to include more tax-exempt components like food allowance (₹2,200/month), transport allowance, LTA, etc. These components reduce taxable income.
Contributing to NPS gives you an extra ₹50,000 deduction under Section 80CCD(1B) — over and above the ₹1.5L 80C limit. Use our NPS Calculator to see the benefit.
Enter your CTC and see your complete salary breakup — Basic, HRA, PF, TDS and monthly take-home instantly.
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