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Say your offer letter says ₹14.76 lakh a year and your first salary credit is ₹1,09,655. Neither is wrong; they measure different things. Read the lines in between to compare offers fairly and spot mistakes on your first slip.
What is the difference between CTC and in-hand salary?
CTC, or cost to company, is the total an employer expects to spend on you in a year. It is not a legal term, so employers build it differently.
Gross salary is the part of CTC paid to you as salary before deductions: basic pay, house rent allowance (HRA), special allowance and similar items.
In-hand (or take-home) pay is gross salary minus what is deducted every month, mainly your provident fund (PF) contribution and income tax deducted at source (TDS).
So the chain runs: CTC minus the employer's own costs gives gross; gross minus your deductions gives in-hand.
What goes into CTC besides your salary?
Employer's PF. Both the employee and the employer contribute 12% of basic wages plus dearness allowance, according to the EPFO's EPF scheme page. The employer's 12% is usually counted in your CTC but never appears in your monthly pay. In the EPFO's own worked example, it splits into 3.67% to your PF account and 8.33% to the pension scheme (EPS). EPS is only for those whose wages at joining are within the wage ceiling; above it, the whole 12% goes to PF.
Small employer charges. The same EPFO example shows the employer also paying 0.5% for EDLI insurance and 0.5% in admin charges. Some companies count these in CTC.
Gratuity. A lump sum paid when you leave after a qualifying period of service, so it is not monthly money. Under the four labour codes in force from 21 November 2025, fixed-term employees qualify after one year of continuous service, says the government's labour codes release.
Variable pay and one-time items. Performance bonus, joining bonus, insurance. Ask if it is guaranteed.
The statutory PF wage ceiling rose from ₹15,000 to ₹25,000 a month from 17 September 2026, according to the EPFO wage ceiling FAQs.
How do you calculate in-hand salary from CTC?
The Union Budget 2025-26 made income up to ₹12 lakh tax-free under the new regime, and ₹12.75 lakh for salaried taxpayers with a standard deduction of ₹75,000, says the Budget 2025 press release. Budget 2026 kept the slabs unchanged for 2026-27, Business Today reported. So if salary is your only income and it is under ₹12.75 lakh, your TDS should be zero and in-hand is simply gross minus PF.
Here is a worked example above that line, using the new regime (the default). The salary structure is illustrative; yours will differ.
Monthly gross: ₹1,20,000 (basic ₹60,000, HRA ₹24,000, special allowance ₹36,000). Annual gross: ₹14,40,000.
Employer PF: 12% of ₹25,000 (the EPFO wage ceiling) is ₹3,000 a month, or ₹36,000 a year. CTC: ₹14,40,000 + ₹36,000 = ₹14,76,000.
Your PF: also ₹3,000 a month, taken from gross.
Taxable income: ₹14,40,000 minus the ₹75,000 standard deduction = ₹13,65,000.
Tax: the Income Tax Department's slab table charges ₹60,000 plus 15% of income between ₹12 lakh and ₹16 lakh. That is ₹60,000 + 15% of ₹1,65,000 = ₹84,750. The same page adds a 4% health and education cess (₹3,390), so the total is ₹88,140 a year, about ₹7,345 a month as TDS.
In-hand: ₹1,20,000 − ₹3,000 − ₹7,345 = ₹1,09,655 a month.
That is about 89% of the monthly CTC. Your own ₹3,000 of PF is not lost; it is savings in your PF account. If your employer used your full basic instead, your PF would be 12% of ₹60,000, or ₹7,200, and your in-hand ₹4,200 lower.
The old regime allows deductions such as those under Section 80C, so run both versions before you declare your choice to HR. If percentages and slab sums feel rusty, the Fermi Concept Library has a lesson for every concept in mathematics, so you can revise them before you check your own numbers.
What should you check on your first salary slip?
Gross on the slip matches the monthly gross in your offer annexure.
The PF deduction matches the rate and wage base your offer states, and your UAN (Universal Account Number) is printed.
TDS matches the tax regime you declared.
The employer's PF share shows in your PF account, not as pay on your slip.
Before you sign, you can send HR three questions: "Could you share the CTC breakup with monthly gross, employer PF, gratuity and variable pay listed separately? Is PF calculated on the ₹25,000 ceiling or on full basic? Is the variable component guaranteed in the first year?"
If your offer comes with a bond, read whether you should sign a service bond in your first job. Weighing two employers? See choosing between a startup and a big company for your first job.
Run the six steps on your own offer annexure before the first credit arrives.
