How CTC becomes take-home pay
CTC is what your employer spends on you in a year. Part of it never reaches your bank account each month. Your employer's share of provident fund and any gratuity provision are set aside for later, and variable pay arrives separately when it is paid out. What remains is your gross salary.
From gross salary, three things come out before your pay lands: your own provident fund contribution, professional tax, and income tax deducted at source. The result is your take-home pay.
What changed in 2026
Two changes affect most salaried people this year. The new labour codes require basic pay and dearness allowance to make up at least half of your pay. A higher basic means higher provident fund contributions, so monthly take-home can fall slightly even though CTC stays the same. The money is not lost. It builds up in your PF account and your gratuity.
The Income-tax Rules, 2026 also added Bengaluru, Hyderabad, Pune and Ahmedabad to the list of cities where HRA exemption is capped at 50% of basic pay, alongside Mumbai, Delhi, Kolkata and Chennai. This matters only under the old regime, because HRA exemption is not available under the new one.
Old regime or new regime?
The new regime has lower tax rates, a higher standard deduction of ₹75,000 and no tax at all on taxable income up to ₹12 lakh. The old regime has higher rates but lets you claim HRA, 80C, 80D and home loan interest. The old regime tends to win only when you pay high rent in a big city and use most of your deductions. The calculator works out both, so you can see the difference for your own numbers.
Common questions
Why is my take-home lower than CTC divided by 12?
Because CTC includes money that is not paid to you monthly: your employer's PF contribution, gratuity, and any variable pay. Your own PF, professional tax and income tax are then deducted from what is left.
How is my bonus taxed?
Variable pay is added to your income for the year, so it is taxed at your highest slab rate. The calculator shows it separately so your monthly figure reflects only your fixed pay.
Is professional tax deductible under the new regime?
No. You still pay it if your state levies it, but it reduces taxable income only under the old regime.
What if I received salary arrears this year?
Arrears can push you into a higher slab. You may be able to claim relief using our salary arrears relief calculator.
What this calculator does not cover
- Income other than salary, such as interest, rent or capital gains.
- Senior citizen slabs under the old regime.
- Taxable perquisites such as a company car or accommodation, and the ₹7.5 lakh annual limit on employer contributions to PF, NPS and superannuation.
- Allowances with specific exemptions, such as leave travel or children's education allowance.
This calculator gives an estimate for guidance. Your employer's payroll may differ slightly in rounding and timing. Last updated 22 September 2026.