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How to Calculate in Hand Salary from CTC

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How to Calculate in Hand Salary from CTC

Table of Contents

What is CTC?

CTC a.k.a Cost to the Company is the sum total of all the employment-related expenses the company incurred for its employees. This is a combination of monetary benefits like salary, allowances and bonuses, retirement contributions, other benefits, and deductibles. A CTC is typically expressed as an annual figure and comprises the following key components:

Basic Salary

Basic salary is, typically, 40 - 50% of the cash component of your salary that is paid out monthly for the services you provide as part of your job. This is an entirely taxable component, hence most employers prefer keeping it under 50% to cap your tax liability and theirs.

Various Allowances

Allowances are offered on top of the basic salary. Few of them are exempt from tax, hence, they are an attractive tool to offer higher salaries without proportionately raising the tax amount. Popular allowances include:

  • House Rent Allowance (HRA)
  • Leave Travel Allowance (LTA)
  • Medical Allowance (MA)
  • Dearness Allowance (DA)
  • Conveyance Allowance
  • Entertainment or Gift Allowance


Many employers offer a performance-linked bonus or incentive. The amount may be a percentage of your overall CTC or a fixed amount with a variable payment frequency, like quarterly or annually.


While the three previously mentioned components are all paid to you, deductibles are subtracted on your behalf. For example, TDS (tax deducted at source) or retirals such as contributions to a provident fund, pension fund, or in the form of gratuity.

What is Gross Salary?

While CTC includes every component whether paid to you or deducted from you, the gross salary is the total amount received before any deductions like taxes. This includes any bonuses or performance-based incentives.

What is In-Hand Salary?

In-hand salary, net salary, or take-home salary is your gross salary minus deductibles such as income tax, professional tax, contribution to EPF, and pension. It must be obvious now, why your in-hand salary is almost always less than your gross salary, which in turn is never equal to your CTC.

How to Calculate CTC?

Now that you’re clear about the definitions of the various terms and the underlying concepts, you will find it easy to calculate your salary. Here are the different formulae for doing so.


Basic Salary + Direct and Indirect Benefits + Retirals and / or Deductions

Gross Salary

Basic Salary + Direct and Indirect Benefits + Retirals. It can also be expressed as CTC - savings / retirement contributions (like EPF, pension, and gratuity).

In-hand Salary

S. No.

Salary Component

Annual Amount 



₹ 10,00,000


Basic Pay

₹ 4,50,000


House Rent Allowance (HRA)

₹ 2,50,000


Medical Allowance

₹ 30,000


Leave and Travel Allowance (LTA)

₹ 46,000


Other allowances

₹ 1,50,000


Provident Fund Contribution (PF)

₹ 54,000 @12% of basic



₹ 20,000

Although the CTC is already mentioned in the first column, we could easily calculate it even if it weren’t. This is because we now know how to calculate the CTC salary by adding all the other components (payment and deductions) together (from S.No. 2 to 8).

If you’re looking to calculate your gross salary, then that is simple too. Just add the deductions – S. No. 7 and 8 – (₹54,000 + ₹20,000) = ₹74,000. Now deduct this from the CTC to arrive at your gross salary of ₹9,26,000. This is a very healthy ratio since there is very little difference between your CTC and gross salary.

Finally, to determine your per annum in-hand salary you will need to subtract the annual TDS from your gross annual salary.


To sum up, a CTC is the cost that company bears to employ you, while the in-hand salary is CTC minus your deductions which include tax and other mandatory and non-mandatory deductions. There’s more to work than just a salary. Work is supposed to be rewarding. Which is why Fi Money, and its RBI-licensed partner Federal Bank, provide a salary account with many benefits. For starters, you get 10% of your salary as Fi-Coins — every month. Plus 5,000 Fi-Coins as a joining bonus. You can redeem these Fi-Coins on an exclusive catalogue of rewards. Other perks include no minimum balance, a free VISA Platinum debit card with zero forex charges, priority customer service & more. 

Frequently asked questions

What is the formula of CTC?

CTC is the entire cost of an employee to the company. The formula to calculate CTC is: Basic Salary + Direct and Indirect Benefits + Retirals and/or Deductions


  • Basic Salary is your fixed remuneration
  • Direct Benefits are bonuses or incentives paid to you directly within the same financial year
  • Indirect Benefits are paid on your behalf such as health insurance, meal vouchers, etc.
  • Retirals include contributions to provident fund, pension fund, and gratuity
  • Deductions include income and professional taxes

How gross is calculated from CTC?

Gross salary is your monthly or annual salary without the deduction of any taxes but after the removal of retirals. Therefore, to calculate your gross salary you must subtract contributions made by the employer to the provident fund or any retirement savings fund from the CTC amount.

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