How it works
CTC is the total an employer spends on you, which includes items you never receive as spendable cash. Employer PF goes into your provident fund, and the gratuity provision is only paid when you leave after five years. Subtracting both gives gross salary — the figure your payslip actually starts from.
From gross, employee PF (another 12% of basic) and professional tax come out, then income tax. Which regime costs less depends entirely on your deductions: the new regime has wider slabs and a ₹75,000 standard deduction but disallows HRA and 80C, while the old regime has narrower slabs and permits both. Someone paying substantial rent with a full 80C is often better off on the old regime; someone with few deductions almost always on the new.
Gross = CTC − Employer PF − Gratuity In-hand = Gross − Employee PF − Professional tax − Income tax
- Basic is typically 40–50% of CTC; HRA is 50% of basic in metros and 40% elsewhere
- Employer PF is 12% of basic and gratuity is 4.81% of basic — both sit inside CTC but never reach you monthly
- Employee PF is another 12% of basic, deducted from gross
- Professional tax is a state levy capped at ₹2,500 a year
- Find your basic payCheck the offer letter. A higher basic means more PF (good long term) and less take-home now.
- Subtract what never reaches youEmployer PF and the gratuity provision are part of CTC but not of gross salary.
- Deduct PF and professional taxEmployee PF is 12% of basic. Professional tax depends on your state and is capped at ₹2,500 a year.
- Compare both tax regimesEnter your rent, 80C and 80D figures so the old-regime comparison uses your real deductions rather than assuming none.
- Divide by twelveThe result is your genuine monthly take-home — the number to build a budget on.
A worked example
On a ₹15,00,000 CTC with basic at 50%, basic is ₹7,50,000 and HRA ₹3,75,000. Employer PF (₹90,000) and gratuity (₹36,075) come out of CTC, leaving a gross salary of ₹13,73,925. Employee PF of ₹90,000 and Karnataka professional tax of ₹2,400 are deducted from that.
With ₹25,000 monthly rent, ₹50,000 of extra 80C and ₹25,000 of health insurance, the old regime allows meaningful deductions and usually wins at this income. Without those deductions the new regime is the better choice — which is exactly why the comparison has to use your numbers, not a default.
Common mistakes
- Budgeting on CTC rather than take-home, which overstates spendable income by 15–20%
- Choosing a tax regime once and never rechecking after a rent increase or a new home loan
- Forgetting that a variable or performance bonus in CTC is not guaranteed monthly income
- Overlooking professional tax, which varies by state and is silently deducted
- Assuming a higher basic is always better — it raises PF and lowers immediate take-home
- Leaving employer NPS out of the calculation, which overstates tax by roughly 31% of the contribution in the top slab
New regime against old regime
| New regime | Old regime | |
|---|---|---|
| Standard deduction | ₹75,000 | ₹50,000 |
| HRA exemption | Not allowed | Allowed |
| 80C (PF, ELSS, insurance) | Not allowed | Up to ₹1,50,000 |
| 80D (health insurance) | Not allowed | Allowed |
| 80CCD(2) employer NPS | Allowed — up to 14% of basic | Allowed — up to 10% of basic |
| Slabs | Wider, lower rates | Narrower, higher rates |
| Best for | Few deductions, no rent | High rent plus full 80C and 80D |
Frequently asked questions
Subtract employer PF and the gratuity provision from CTC to get gross salary, then deduct employee PF, any employer NPS contribution, professional tax and income tax. Divide by twelve for the monthly figure. As a rough guide, take-home is usually 70–80% of CTC.
Related calculators
Related terms
Related guides
How BudgetAnalyzer helps
Take-home pay is the number every budget starts from. Put the monthly figure from this calculator into BudgetAnalyzer as your income, and the app will suggest realistic per-category targets from your own spending history — turning a salary breakdown into an actual monthly plan.