How the in-hand salary is calculated
Your cost to company (CTC) is everything your employer spends on you in a year. Your in-hand salary is what reaches your bank account each month. The calculator works through the gap step by step:
- Basic pay is usually 40% to 50% of CTC. PF and gratuity are calculated on it.
- Employer PF and gratuity are part of CTC but are not paid to you monthly, so they are removed to get gross salary.
- Employee PF (12% of basic), professional tax and income tax are deducted from gross salary.
- Variable pay or bonus is shown separately because it is usually paid once a year, not monthly.
Tax rules used (FY 2026-27)
The new tax regime is the default. Its slabs are nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% for each ₹4 lakh band, and 30% above ₹24 lakh. Salaried people get a ₹75,000 standard deduction, and the Section 87A rebate makes tax zero when taxable income is ₹12 lakh or less. Just above ₹12 lakh, marginal relief limits the tax to the amount by which income exceeds ₹12 lakh. A 4% health and education cess is added to the tax.
In the old regime the standard deduction is ₹50,000, and deductions such as 80C (including your own PF, up to ₹1.5 lakh), 80D and HRA reduce taxable income. Use our income tax calculator to compare both regimes in detail, and the HRA calculator to work out your HRA exemption.
Tips to increase take-home pay
- Ask whether your employer can cap PF at ₹15,000 basic. Lower PF means higher monthly pay, but less retirement savings.
- Employer contribution to NPS (up to 14% of basic in the new regime) is tax-free and can lower your tax.
- If your deductions (HRA, 80C, home loan interest) are large, compare the old regime, which can still win for some people.