FY 2025–26 / AY 2026–27 salary illustration: CTC includes employer costs as well as your earnings. This model subtracts employer PF and a gratuity provision from CTC to estimate gross salary, then subtracts employee PF, annual professional tax and modelled income tax to estimate take-home.
Employer and employee PF are each assumed to be twelve percent of basic salary without a wage ceiling. Gratuity provision is assumed to be 4.81 percent of basic salary within CTC. Actual payroll coverage, limits and entitlement depend on your employment terms and applicable rules.
Bonus remains part of annual gross earnings in this model. The monthly output is an annual average, so a bonus paid separately can make individual payslips differ. Basic salary, HRA and bonus must fit the modelled gross salary.
The new-regime calculation uses the ₹75,000 standard deduction and ordinary resident-salary rules, including rebate and surcharge marginal relief before four-percent cess. Special-rate income and other special provisions are excluded.
The old-regime illustration assumes eligibility for ₹1.5 lakh under section 80C and ₹50,000 HRA exemption, plus the ₹50,000 standard deduction. These are not automatic entitlements. For an individual comparison, enter your actual eligible deductions in the detailed tax calculator.
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Salary Breakdown
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Gross Salary Composition
Deduction Breakdown
CTC vs Gross vs Net In-Hand
What is CTC (Cost to Company)?
CTC or Cost to Company is the total amount an employer spends on an employee in a year. However, your CTC is never equal to your take-home salary. CTC includes elements like Employer Provident Fund (PF) contributions and Gratuity provisions, which never hit your monthly bank account.
CTC vs Gross Salary vs Net Salary
- CTC: The total expense for the employer.
- Gross Salary: Your CTC minus the employer’s contributions (PF & Gratuity). This is your actual total earning before taxes and your own PF deductions.
- Net (In-Hand) Salary: Your Gross Salary minus all employee deductions (Your PF share, Professional Tax, and Income Tax). This is what reaches your bank account.
Old vs New Tax Regime
The New Tax Regime is the default tax system in India. It offers lower tax rates and a higher tax-free threshold (up to ₹12 Lakhs under Section 87A rebate for FY 25-26), but it strips away most deductions like 80C and HRA. The Old Tax Regime has higher tax rates but allows you to claim exemptions for Rent (HRA), Provident Fund, Life Insurance, and Home Loan interest to lower your taxable income.
Consistent example: Annual CTC ₹5,00,000, basic salary forty percent of CTC, employer PF ₹24,000 and gratuity provision ₹9,620 produce gross earnings of ₹4,66,380. The annual bonus is already within gross earnings.
With employee PF ₹24,000, annual professional tax ₹2,400 and nil modelled new-regime tax, annual take-home is ₹4,39,980 and the monthly equivalent is ₹36,665. Employer costs and employee deductions are each counted once.
Amounts are displayed to the nearest rupee before filing-specific rounding. Actual pay depends on your employer’s salary structure, eligibility, deductions and payment schedule. Official AY 2026–27 tax guidance.
Last Updated on 4 weeks ago by Team Paisaseekho
