A CTC is everything an employer spends on you in a year, including money you never see each month, like their PF share and gratuity. The salary slip is what's left, split into parts.
Since the labour codes took effect on 21 November 2025, basic pay and DA should make up at least half of pay. Here's how a typical breakup works now.
The parts of a CTC
| Component | Usual amount | In your monthly pay? |
|---|---|---|
| Basic pay | 50% of CTC | Yes |
| House rent allowance | 50% of basic in metros, 40% elsewhere | Yes |
| Special allowance | Whatever is left | Yes |
| Variable pay or bonus | 0% to 20% of CTC | Usually once or twice a year |
| Employer PF | 12% of basic, often capped at ₹1,800 a month | No, goes to your PF account |
| Gratuity | 4.81% of basic, if included | No, paid when you leave after 5 years |
Worked examples
Example: ₹12 lakh CTC, 50% basic, metro
Monthly: basic ₹50,000, HRA ₹25,000, special allowance ₹20,795.
Employer PF ₹1,800 a month and gratuity ₹28,860 a year sit inside the CTC.
In hand: about ₹93,795 a month, after ₹1,800 PF and ₹200 professional tax. No income tax in the new regime.
Example: ₹20 lakh CTC with 10% variable
Fixed pay in hand is about ₹1,28,903 a month, with the ₹2 lakh variable paid separately, after about ₹1.78 lakh tax for the year.
With capped PF, moving basic from 40% to 50% changes the split but barely changes take-home pay. Compare whole offers with the CTC to in-hand calculator.
How to use this calculator
- Enter your CTC and the share that's basic pay.
- Say whether you live in a metro city, for HRA.
- Add any variable pay and fixed allowances.
- Choose your PF type, whether gratuity is inside CTC, and your tax regime.
FAQs
Why is basic pay 50% of CTC now?
The labour codes, in force from 21 November 2025, define wages so that allowances above half of pay are added back to wages for PF, gratuity and other dues. Many employers have raised basic to 50% to keep things simple.
Does a higher basic lower my in-hand pay?
Only if your PF isn't capped. With PF at ₹1,800 a month, a higher basic changes the split but not your take-home. With PF on full basic, more goes into PF.
Is gratuity part of my salary?
Some employers include 4.81% of basic in CTC, but you only receive it when you leave after 5 years (1 year on a fixed-term contract).
Is HRA tax-free?
Only in the old regime, and only if you pay rent. Use the HRA exemption calculator to work it out.
Sources
- Business Today: tax slabs for FY 2026-27 after Budget 2026
- Income Tax Department: tax rates and surcharge
- ClearTax: Income-tax Rules 2026 and HRA cities
- ClearTax: Section 44ADA presumptive tax
- ThePrint (PTI): EPF rate of 8.25% for 2025-26 ratified
Results are estimates for resident individuals under 60 and aren't tax, legal or financial advice. For your own return, check with a chartered accountant. Spotted a mistake? Tell us.