Difference between CTC and In-Hand Salary

In this guide, we explore the best practices for understanding the difference between CTC and In-Hand Salary. Many new joiners and even experienced professionals face confusion when their take-home pay doesn't match the "CTC" mentioned in their offer letter.

What is CTC?

Cost to Company (CTC) is the total amount an employer spends on an employee per year. This includes not just your salary, but also contributions to PF, Gratuity, Insurance, and even office space or equipment in some cases.

The Deductions

1. Employee Provident Fund (EPF): Usually 12% of your basic salary.
2. Professional Tax: A small monthly tax levied by state governments.
3. TDS (Tax Deducted at Source): Income tax based on your slab.
4. Gratuity: A portion held back and paid after 5 years of service.

How to Calculate In-Hand Salary

To calculate your monthly take-home, you need to subtract all the above components from your Gross Salary.

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