Key takeaways
- CTC includes costs the employer bears that do not hit your account every month.
- Take-home is after employee PF, professional tax and income-tax withholding.
- A hike in CTC is not the same percentage hike in take-home.
- Tax in Finaura’s salary tools follows the financial year labelled on the calculator.
An offer letter leads with CTC because that is the number HR is authorised to talk about. Your landlord cares about the credit in your account. Those are different ledgers. Learning the split once saves years of arguing with a “₹16 lakh job” that feels like much less.
CTC is not a salary
Cost to company is the employer’s estimated annual cost of employing you. It typically includes basic pay, allowances, the employer’s provident-fund contribution, and a gratuity accrual. Employer PF and gratuity are real money in a retirement sense. They are not part of the monthly NEFT you can spend on rent.
Gross is closer to “pay before statutory cuts”
Once employer PF and gratuity are removed from CTC, what remains is closer to gross salary — the figure on which employee PF and tax calculations usually sit. Exact definitions vary by company (some include bonuses in CTC, some show them separately). Always read the breakup table, not only the cover-page number.
Take-home is what remains after cuts from gross
Employee PF (commonly 12% of basic, unless a wage-ceiling option applies), professional tax where the state levies it, and income tax deducted at source come out of gross. The in-hand salary calculator applies that sequence using the tax year shown on the page (currently FY 2025-26 in the tool). Your employer’s TDS month-by-month will not be perfectly even even if the annual tax is right.
Hypothetical ₹16 LPA — assumptions stated
This is not a survey of actual offers. It is a teaching walkthrough. Assume: CTC ₹16,00,000; basic is 40% of CTC; HRA is 40% of basic; employer PF 12% of basic; gratuity accrual 4.81% of basic; employee PF 12% of basic without the ₹15,000 wage cap; professional tax at a typical non-zero state; new tax regime; no variable pay. Plug those into the in-hand calculator. You will see employer contributions leave CTC first, then employee PF, professional tax and tax leave gross. The remaining monthly figure is the illustration of take-home under those settings — not a promise of your offer.
Change only the tax regime, or add rent and old-regime deductions, and take-home moves. That is why two ₹16 LPA letters are not comparable until the breakup and the regime are aligned. Use the offer comparison calculator when you have two real letters.
Try it yourselfConvert CTC to illustrated take-homeFY-labelled tax, PF, gratuity and professional tax — with a full monthly breakdown.Hikes and new offers
A 20% CTC hike can be less than 20% in take-home if more of the increment falls in a taxed slab, or if PF rises with basic. The salary hike calculator is for that translation. It still uses the same tax year as the other India salary tools.
What Finaura will not claim
We will not tell you the “average take-home for 16 LPA in Bangalore.” That would be invented statistics. We will show the arithmetic of the breakup you enter, for the tax year coded in the tool.