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How CTC is converted to in-hand salary
CTC (Cost to Company) includes components you never receive in your bank account. The calculator first removes employer-side costs — employer EPF contribution and gratuity provision if included in your CTC — to arrive at gross salary. From gross, it deducts income tax (computed on the Tax Year 2026–27 slabs after the applicable standard deduction), your own EPF contribution, and a state-specific professional-tax estimate. What remains is your annual in-hand, divided by 12 for the monthly figure. Basic salary defaults to 50% of CTC as an editable estimate, not an official universal percentage; use your offer letter's actual allocation.
New regime vs old regime for Tax Year 2026–27
For Tax Year 2026–27, the new regime has seven slabs from nil (up to ₹4 lakh) to 30% (above ₹24 lakh), a ₹75,000 standard deduction, and a resident-individual rebate of up to ₹60,000 at total income up to ₹12 lakh, with marginal relief immediately above that threshold. The old regime for an ordinary individual below 60 retains its ₹2.5 lakh nil slab and ₹50,000 standard deduction. The calculator computes both regimes from the configured inputs; personal eligibility and deductions can change which regime is preferable.
EPF, professional tax and gratuity explained
The calculator uses 12% of the editable basic estimate for employee and employer PF. EPFO guidance commonly applies 12% to basic wages plus dearness allowance, but coverage, the wage ceiling, employer policy, pension allocation and voluntary higher contributions can change actual credits; the entire employer contribution does not necessarily reach the employee's EPF balance. Professional tax varies by state, so each configured amount is a state-specific estimate/default. The 4.81% gratuity allocation is also an employer-dependent estimate; enable it only if your CTC structure includes it. HRA, allowances, bonus and variable pay are employer-dependent and are not separately allocated unless reflected in the values you enter.
How CTC becomes in-hand salary: the full deduction chain
Cost to Company (CTC) is everything your employer spends on you — not what lands in your bank account. This calculator uses an editable 50% basic-pay estimate and optional employer-dependent PF and gratuity allocations; it does not treat HRA, allowances, bonus or variable pay as universal statutory percentages. It then deducts employee PF, a state-specific professional-tax estimate and income tax under the selected regime. What remains, divided by twelve, is an estimate of monthly in-hand salary; use the allocations from your own offer letter for a closer result.
New regime Tax Year 2026–27: standard deduction and rebate
Under the new regime for Tax Year 2026–27, the ₹75,000 standard deduction can reduce ₹12.75 lakh of salary to ₹12 lakh of total income. For an eligible resident individual, the rebate is capped at ₹60,000 at that threshold, with marginal relief immediately above it. The calculator's slab values, rebate, standard deductions and cess are checked against the Income-tax Act, 2025 as amended by Finance Act, 2026; the source links and verification date are shown below.
Old vs new regime: the ₹4–4.5 lakh deduction rule of thumb
The old regime only wins if your combined deductions — Section 80C investments, HRA exemption, home-loan interest, 80D health premiums — exceed roughly ₹4–4.5 lakh a year, because that is the break-even where its lower base exemption and deductions overcome the new regime's wider slabs and larger rebate. For most salaried taxpayers without a home loan, the new regime now pays more in hand. The regime toggle above computes both side by side with the exact rupee difference for your CTC, so the choice becomes arithmetic, not guesswork. Once you know your monthly surplus, our SIP and PPF calculators show what it can build.
Frequently asked questions
What is the in-hand salary for a 12 LPA CTC in Tax Year 2026–27?
Roughly ₹85,000–90,000 per month under the new regime with a standard 50% basic structure — income tax is near zero because taxable income after the standard deduction stays within the ₹12 lakh rebate limit, so deductions are mainly your EPF contribution and professional tax.
Can a ₹12.75 lakh salary have no new-regime income tax in Tax Year 2026–27?
For an eligible resident salaried individual, the ₹75,000 standard deduction can reduce ₹12.75 lakh of salary to ₹12 lakh of total income, where the rebate is capped at ₹60,000. Marginal relief applies immediately above the ₹12 lakh threshold.
Why is my in-hand salary so much lower than my CTC?
CTC includes employer EPF, gratuity provision, insurance premiums and sometimes one-time bonuses — money that never reaches your monthly account. Add your own EPF deduction, income tax and professional tax, and monthly in-hand typically lands at 70–80% of CTC÷12.
Which tax regime should I choose for Tax Year 2026–27?
If your total deductions (80C, HRA, home-loan interest, 80D) exceed roughly ₹4–4.5 lakh, the old regime may win; otherwise the new regime is better for almost everyone. The calculator shows both side by side with the exact saving.
Are these tax slabs verified for Tax Year 2026–27?
Yes — the slabs, standard deductions, resident-individual rebate, marginal relief and cess were checked against the Income-tax Act, 2025 as amended by Finance Act, 2026 and the supporting official sources listed below. The verification date is shown with those sources.
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