Salary · 7 min read
CTC vs Gross vs Take-home: what's actually in your bank?
Updated May 2026 · By the StafFixHR team
Three numbers, four if you count "net". They're all different and the distance between them is bigger than most people realise. Here's how to read an Indian salary offer or payslip without getting fooled.
The three (sometimes four) numbers
- CTC (Cost to Company) — what the company is spending on you in total. Includes your salary, employer's share of PF, gratuity provision, insurance premium, sometimes even the laptop and electricity at your seat.
- Gross salary — sum of all pay components that go into your monthly salary slip. Excludes things the company pays on your behalf to other entities.
- Net / Take-home — what hits your bank after deductions (PF, professional tax, income tax, ESI if applicable).
- "In-hand" salary — usually a synonym for take-home, sometimes used to mean "take-home after voluntary deductions" (PF top-ups, loan EMI, NPS). Best to clarify when someone uses it.
A real example: ₹12 LPA offer
Let's break down a fairly standard ₹12 lakh / year CTC offer for a non-metro Bangalore employee with no special add-ons.
| Head | Annual | Monthly |
|---|---|---|
| Earnings (part of monthly gross) | ||
| Basic (50% of CTC convention) | ₹6,00,000 | ₹50,000 |
| HRA (40% of Basic, non-metro) | ₹2,40,000 | ₹20,000 |
| Special allowance | ₹2,38,800 | ₹19,900 |
| Monthly Gross | ₹10,78,800 | ₹89,900 |
| Employer contributions (in CTC, not in gross) | ||
| Employer PF (12% of Basic) | ₹72,000 | ₹6,000 |
| Gratuity provision (~4.81% of Basic) | ₹28,860 | — |
| Group medical insurance | ~₹20,340 | — |
| CTC | ₹12,00,000 | — |
| Deductions from monthly gross | ||
| Employee PF (12% of Basic) | ₹72,000 | ₹6,000 |
| Professional tax (Karnataka) | ₹2,400 | ₹200 |
| TDS (new regime, after std deduction) | ~₹62,400 | ~₹5,200 |
| Monthly Take-home | ~₹9,42,000 | ~₹78,500 |
So your "₹12 LPA" lands as roughly ₹78,500 / month in your bank — about 78% of the CTC. The PF you don't see is forced retirement savings, so you're not actually "losing" it; it accrues in your EPF account. But on day-to-day cash, the gap is real.
Why some CTC components are sneaky
Watch out for these CTC inflators that don't add to your take-home:
- ESOPs / RSUs — the offer doc may include the annualised value at FMV. It's real, but illiquid until vest + exercise + sale.
- Variable / performance bonus — often quoted at 100% target; the actual payout is between 60-120% depending on company / individual rating.
- Joining bonus — usually has a claw-back clause if you exit within 12 months.
- Sign-on stock that vests over 4 years — divided by 4, then by 12, lands much smaller monthly than the headline.
- Gratuity provision — only realisable after 5 years of service.
How to compare two offers
Don't compare CTC to CTC. Both numbers are heavily inflated by employer contributions that vary widely between companies. Instead, ask each prospective employer for:
- Monthly gross (what's on the payslip)
- Estimated monthly take-home (after PF, PT, and tax)
- Variable component — target + recent year's actual payout
- Equity component — number of units + vest schedule + 409A valuation (or last traded share price)
Now you can compare apples to apples.
Quick-reference rules of thumb
- Take-home ≈ 72-80% of CTC for ₹8-20 LPA range (lower at higher CTC due to slab tax)
- Basic is typically 40-50% of CTC. Higher Basic = higher PF + gratuity = better long-term wealth, lower take-home.
- HRA exemption = 50% of Basic in metro, 40% non-metro. Make sure your rent receipts cover the limit.
- Old regime saves tax only if your total Chapter VI-A deductions (80C, 80D, HRA, etc.) exceed ~₹3.75 lakh. Otherwise new regime is better.