Whether you have just got out of college, are a fresher, or already a pro on your career path, I am pretty sure you have thought of how to calculate your in-hand salary has come to your mind in several types, or maybe you have even given it a few tries. In order to do this, first, let us get a clear picture of the components when it comes to CTC in hand.

The Difference Between CTC and In-Hand Salary

Have you come across that the CTC offered during the hiring process and the amount you get in hand has a highly considerable difference. If you are a fresher, then you would most probably have the misconception that the CTC that is offered by the organization is the same as the in-hand salary. But, that is not true. There is a huge difference between the two of them, and the take-home salary for you every month is comparatively different.

There are several deductions from your CTC, which ends up with a big difference and comes to your hand as the final take-home salary.

Here are some general terminologies you would want to know to get to understand the whole picture.

CTC: The cost to the company, also known as CTC, is the amount of money spent by the employer to hire a new employee. It consists of many components that are added to the basic pay, such as HRA, medical insurance, provident fund, and so forth. Meal vouchers, taxi service, subsidized loans, and other benefits that may be included. All of these components add up to the total cost to the firm. Essentially, CTC is the cost incurred by the company in acquiring and retaining an employee in the firm.

Gross Salary: The gross salary is the remaining amount over after deducting the EPF and gratuity from the CTC. Essentially, the salary received before income tax, professional tax, and other deductions. It includes bonuses, overtime pay, paid holidays, and other differences.

Gratuity: This is a portion of the employee’s pay paid by the firm as a gesture of gratitude for the services provided by the company throughout the employee’s duration of work. It is primarily defined as the benefit granted to the employee upon retirement. According to the Income Tax Act, an employee is qualified to collect the gratuity amount after five years of full-time work with an organization.

In-Hand Salary or Take Home: Take-home pay, also known as in-hand salaries, is the amount received by an employee after taxes and other deductions are made. The distinction between gross and net pay is that the take-home pay is the compensation after income tax, professional tax, and other business policy deductions have been subtracted from the gross salary.

Components of Cost to Company

Direct Benefits:

  • Basic Salary
  • Medical Expenses
  • Conveyance
  • Stay or House Allowances
  • Dearness Allowances
  • Leave Travel Allowance
  • Travel or Fuel Allowance
  • Phone Allowances
  • Incentives
  • Special Allowances

Indirect Benefits:

  • Interest-Free Loans
  • Food Coupons and More
  • Company Accommodation
  • Insurance
  • Income Tax Savings
  • Office Rent

Saving Contributions:

  • Annuation Benefit
  • EPF
  • Gratuity

How to Calculate In Hand Salary from CTC

Usually, a salary calculator does the work for you. It has a pre-programmed formula that s used to calculate salary, inclusive of the factors such as CTC, bonus, EPF, and other essentials. It clearly understands the various deductions and concludes the take-home salary.

Here is an example to demonstrate how

– If your CTC is ₹6,00,000.

– If you receive a bonus of ₹40,000, the gross salary will be ₹5,60,000 after excluding the bonus.

– From the gross salary you can subtract the professional tax, EPF employer contribution, and EPF employee contribution. Let us say, that can be ₹2,400, ₹20,500, and ₹43,400 respectively.

– After deducting this from your gross salary, you will be left with the take-home salary of ₹5,16,600.

₹6,00,000 – ₹40,000

Gross Salary = ₹5,60,000

₹5,60,000 – 43,400

Take Home Salary = ₹5,16,600

Summary of the Calculation Procedure

  1. Firstly, calculate your gross salary. This is done after you deduct bonuses, deducting EPF and Gratuity from the CTC.
  2. Then, you must calculate the taxable income by making the needful deductions from the total income.
  3. The income tax can be calculated by adding the respective slab rate on calculated taxable income.
  4. After all of these deductions, finally calculate the net income or in-hand salary.


Now, you know that the take-home salary basically means the money you would take home after all the deductions are made. Once you get a clear idea of all of the deductions made by your company, you do not really need external help to get this calculated. You can just do it all by yourself. But you must also remember that these deductions can vary based on the CTC, and the employee provident fund, income tax, and professional tax can also vary based on your income.