This guide is part of our salaried money playbook, which follows your money from the offer letter to the EMI. Here we start at the very beginning: why a “₹12 lakh package” does not mean ₹1 lakh a month in your account, and how to work out the real number before you sign an offer, plan a budget or apply for a loan.
CTC, gross salary and in-hand salary: three different numbers
Offer letters lead with CTC because it is the biggest number. It is a fair measure of what you cost your employer, but a poor guide to what you can spend. The gap between the two is not a trick; most of it is either saved for you (PF, gratuity), protecting you (insurance), deferred (variable pay) or paid to the government (tax). You just can’t spend it this month.
What sits inside a typical CTC
| Component | Reaches your account monthly? | What to know |
|---|---|---|
| Basic pay | Yes | The anchor: PF, gratuity and often HRA are calculated on it. |
| House rent allowance (HRA) | Yes | Often 40%–50% of basic. Tax relief on HRA is available only under the old regime. |
| Special or flexi allowance | Yes | The balancing figure; fully taxable. |
| Employer PF (12% of basic, or of the ₹15,000 wage ceiling) | No | Goes to your EPF account. Your savings, but locked for the long term. |
| Gratuity provision | No | Paid only when you leave after the qualifying service. Employers often budget about 4.81% of basic (15 days’ basic for each year, spread over 12 months). |
| Group health / life insurance premium | No | Real value to you, but not cash. |
| Variable pay / performance bonus | Usually once or twice a year | Depends on your and the company’s performance; may be paid partly or not at all. |
| Joining bonus, ESOPs, retention bonus | One-off or later | Often shown separately; read the clawback conditions. |
Worked example: a ₹12 lakh and an ₹18 lakh CTC
Here is how two common packages translate into a monthly bank credit. Both are illustrative structures, not a real employer’s: basic at 50% of CTC, HRA at 40% of basic, employer PF at 12% of full basic, gratuity at 4.81% of basic, ₹6,000 a year of group insurance, 10% variable pay, the new tax regime, and Karnataka professional tax.
| Per month | ₹12 lakh CTC | ₹18 lakh CTC |
|---|---|---|
| CTC ÷ 12 | ₹1,00,000 | ₹1,50,000 |
| Less: variable pay (10%, paid later) | ₹10,000 | ₹15,000 |
| Less: employer PF | ₹6,000 | ₹9,000 |
| Less: gratuity provision | ₹2,405 | ₹3,608 |
| Less: insurance premium | ₹500 | ₹500 |
| Gross monthly pay | ₹81,095 | ₹1,21,892 |
| Less: your PF (12% of basic) | ₹6,000 | ₹9,000 |
| Less: professional tax | ₹200 | ₹200 |
| Less: TDS (income tax spread over 12 months) | ₹0 | about ₹9,980 |
| In-hand salary | ₹74,895 | about ₹1,02,712 |
| In-hand as a share of monthly CTC | about 75% | about 68% |
Illustrative, not tax advice. Tax assumes the new regime with the ₹75,000 standard deduction and that variable pay is paid in full within the year; at ₹12 lakh CTC, taxable income stays below ₹12 lakh, so the rebate brings tax to nil. Your employer’s structure, your regime choice and your state’s professional tax will change the result.
Where a ₹1,00,000 monthly CTC goes (₹12 lakh package)
Same illustrative structure as the table above. Blue items are savings in your EPF account; amber is paid later and only if earned; dark and grey items are benefits you do not receive as cash.
Five things that move your in-hand number
How PF is calculated
PF at 12% of full basic takes more out of each payslip than PF on the ₹15,000 statutory wage ceiling (₹1,800 a month). Many employers let you choose. A higher PF lowers in-hand pay but builds retirement savings.
Your tax regime
The new regime is the default. It allows a ₹75,000 standard deduction for salaried people, and the rebate means no tax if taxable income is up to ₹12 lakh. The old regime allows HRA, 80C-type and other deductions at higher slab rates. Tell your employer your choice early so TDS is right from April.
The share of basic in your package
A higher basic means more PF and gratuity, so less in-hand today and more savings later. Under the labour codes notified on 21 November 2025, “wages” (basic, DA and retaining allowance) must be at least half of total remuneration. The Labour Ministry has clarified that take-home pay need not fall where PF is deducted on the ₹15,000 wage ceiling.
Variable pay timing
A 10% variable component is not monthly income. Budget and borrow on the fixed part only; treat the bonus as a bonus.
Your state
Professional tax differs by state. In Karnataka it is ₹200 a month (₹300 in February, ₹2,500 a year) for monthly salaries of ₹25,000 or more; some states levy none.
Comparing two job offers: use in-hand, not CTC
Two offers with the same CTC can pay very differently each month. Offer A might include 20% variable pay, a large gratuity and insurance line, and a joining bonus with a one-year clawback. Offer B might be 95% fixed. Before you compare, ask HR for the full break-up and convert each offer into:
- Guaranteed monthly in-hand (fixed pay after PF, professional tax and estimated TDS).
- Expected yearly extras (variable pay at a realistic payout, not the maximum).
- Long-term savings (employer PF, gratuity, NPS).
- Benefits (insurance cover for you and your family, and what a similar policy would cost you).
Negotiate on CTC, but plan your life on in-hand pay.
Why lenders look at in-hand, not CTC
When you apply for a personal loan, the lender cares about the salary that actually lands in your account every month, because that is what pays the EMI. That is why Omozing asks for your latest salary slip and six months of salary-account bank statements, and why our minimum is stated as a take-home of ₹40,000 a month, not a CTC. A credit officer checks that the net pay on your slip matches the credits in your statement; we explain what else they notice in what lenders see in your salary account.
Lenders then compare your existing EMIs with that in-hand number. That ratio, FOIR, decides how much more you can borrow. See FOIR explained and the table in how much personal loan you can get on your salary. Variable pay, bonuses and reimbursements are usually given less weight or ignored because they are not guaranteed.
Turn your in-hand salary into a plan
Once you know the real monthly number, three habits make it go further:
Budget on fixed in-hand
Set rent, EMIs, SIPs and bills against the guaranteed monthly figure, never the CTC or the bonus month.
Keep EMIs well inside your pay
Total EMIs that stay comfortably below half of in-hand pay leave room for savings and surprises.
Use bonuses on purpose
Clear costly debt, top up an emergency fund, then invest or spend.
Avoid filling gaps with apps
A short-term loan app to bridge a month costs far more than it looks; check with our loan app cost calculator.
Know your in-hand? See what you can borrow.
Omozing personal loans are for salaried people with a take-home of ₹40,000+ a month: up to ₹25 lakh, 3–36 months, rates from 11% a year, with the full cost in the Key Fact Statement before you sign.
Frequently asked questions
What is the difference between CTC and in-hand salary?
CTC is the total your employer spends on you in a year, including employer PF, gratuity, insurance and variable pay. In-hand salary is what reaches your bank each month after your own PF, professional tax and TDS are deducted.
How much in-hand salary will I get on a ₹12 lakh CTC?
It depends on the structure, but in an illustrative structure with 10% variable pay and PF on full basic, the monthly in-hand under the new regime is about ₹75,000. A higher fixed share or PF on the ₹15,000 ceiling raises it.
Is employer PF part of my CTC?
In most private-sector offers, yes. The employer’s 12% contribution is shown inside CTC but goes to your EPF account, so it does not reach your monthly salary credit.
Do the new labour codes reduce take-home salary?
The codes require wages (basic, DA and retaining allowance) to be at least 50% of remuneration. The Labour Ministry has said take-home pay is not reduced where PF is deducted on the ₹15,000 wage ceiling. Your result depends on how your employer restructures pay.
Do lenders use CTC or in-hand salary for a personal loan?
Lenders work from your net monthly salary, checked against your salary slip and bank statement. Variable pay and bonuses are usually given less weight because they are not guaranteed.
Is gratuity paid every month?
No. Gratuity is a lump sum paid when you leave or retire after the qualifying service. The amount shown in CTC is a provision, not monthly cash.
General information, not tax, legal or financial advice. Pay structures vary by employer; check your payslip and ask your HR team or a chartered accountant about your own case. Figures as of October 2026.
Sources: New-regime slabs, ₹75,000 standard deduction and ₹12 lakh rebate threshold (Lok Sabha reply as reported by TaxGuru, February 2026); no slab change in Union Budget 2026-27 and Income-tax Act, 2025 effective 1 April 2026 (Outlook Money, 1 February 2026); labour codes notified 21 November 2025, 50% wage rule and Labour Ministry clarification on PF and take-home pay (Outlook Money, December 2025); Karnataka professional tax from 1 April 2025 (ClearTax). Check the official sources (incometax.gov.in, labour.gov.in, your state’s tax department) before acting.
Omozing is the digital lending brand of Aparampaar Finance Private Limited, an RBI-registered non-deposit-taking NBFC. See our regulatory disclosures and grievance redressal process.