An offer letter in India says "CTC ₹12 lakh", and the first salary credit is around ₹92,000. Most people expect ₹1 lakh. The gap is not a mistake. CTC (cost to company) counts money your employer spends on you that never reaches your bank account each month.
This is how a CTC turns into in-hand salary for FY 2026-27 under the new tax regime, with real numbers.
CTC to in-hand salary chart (FY 2026-27, new regime)
| CTC a year | Employer PF + gratuity | Employee PF | Income tax + cess | In-hand a month | In-hand share of CTC |
|---|---|---|---|---|---|
| ₹6 lakh | ₹40,338 | ₹28,800 | ₹0 | ₹44,039 | 88.1% |
| ₹10 lakh | ₹55,231 | ₹36,000 | ₹0 | ₹75,531 | 90.6% |
| ₹12 lakh | ₹59,077 | ₹36,000 | ₹0 | ₹91,877 | 91.9% |
| ₹18 lakh | ₹70,615 | ₹36,000 | ₹1,36,112 | ₹1,29,573 | 86.4% |
Assumptions: basic pay is 40% of CTC, HRA is half of basic, PF on the capped wage, gratuity included, ₹2,400 a year professional tax, no variable pay. Change any of these and the numbers move, so check your own letter.
Where the money goes
1. Employer PF. Your employer puts 12% of your basic pay into your EPF account. It is part of your CTC, but it is retirement savings, not salary. From 17 September 2026 the EPF wage ceiling is ₹25,000 a month, so on the capped rule this part is at most ₹3,000 a month (₹36,000 a year).
2. Gratuity. Many companies count gratuity in CTC: 15 days of basic pay for each year of service, about 4.81% of basic. You only receive it after five years with the same employer (or in the cases the law allows earlier). It is not monthly pay.
3. Your own PF. The same 12% of basic is cut from your salary as your contribution. It is your money, in your EPF account, but it doesn't reach your bank account.
4. Professional tax. Many states charge it, often ₹200 a month, never more than ₹2,500 a year. Some states don't charge it at all.
5. Income tax. Under the new regime for FY 2026-27, there is a ₹75,000 standard deduction and no tax if taxable income is ₹12 lakh or less, thanks to the rebate. That is why the ₹6, ₹10 and ₹12 lakh rows above pay no tax. Above ₹12 lakh the slabs apply (5% from ₹4 lakh up to 30% above ₹24 lakh), plus 4% cess.
Three things to check in your offer letter
- Is variable pay inside the CTC? A "₹15 lakh CTC with 20% variable" pays ₹12 lakh for sure and the rest only if targets are met.
- What is the basic pay share? A higher basic means more PF (less in-hand now, more savings) and higher gratuity.
- Are joining bonus, insurance or meal cards counted in CTC? One-time and in-kind items make the CTC look bigger than the salary.
Work it out for your own CTC
You can enter your own CTC, basic pay share, variable pay and professional tax on Jobiba's CTC to in-hand salary calculator. It shows each deduction line by line, and the in-hand to CTC calculator works the other way round.
To see what employers in India are paying for your role right now, look at salaries on Jobiba India, built from pay stated in live job ads, or browse jobs in India that list pay.
This is general information for salaried employees under the new regime, not tax advice. Surcharge above ₹50 lakh is not covered.
Bhagwati Suthar is the founder of Jobiba (Jobiba AI Labs).
