Understanding CTC to In-Hand Salary
CTC (Cost to Company) represents the total expense incurred by a company for an employee. However, your in-hand salary is significantly different due to various deductions and employer contributions.
Components of CTC
- Basic Salary: Foundation of salary structure (typically 35-50% of CTC)
- HRA: House Rent Allowance (15-25% of CTC)
- Special Allowance: Flexible component to adjust CTC
- Employer PF: 12% of Basic (included in CTC but not in-hand)
- Gratuity: 4.81% of Basic (payable on exit after 5 years)
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CTC vs In-Hand
Your in-hand salary is typically 65-85% of CTC. The gap includes employer contributions (PF, gratuity, insurance) and tax deductions (TDS, PT).
Deductions from Gross Salary
| Deduction | Rate | Basis |
|---|---|---|
| Employee PF | 12% | Basic Salary |
| Professional Tax | ₹200/month | Fixed (varies by state) |
| TDS (Income Tax) | Slab rates | Taxable Income |