You accept a ₹15 LPA offer, divide by 12, and expect ₹1.25 lakh a month. Then the first payslip lands at around ₹1.05 lakh and you wonder where the rest went. The gap between CTC (Cost to Company) and in-hand salary catches almost everyone the first time. Here's exactly what happens to your money.
CTC is what you cost, not what you're paid
CTC is the total a company spends on you in a year — including amounts that never reach your bank account. Your in-hand (take-home) salary is what's left after four things are removed: the employer's PF contribution, your own PF, professional tax, and income tax (TDS).
The four deductions, one by one
1. Employer's PF — part of CTC, but not paid to you
Your employer contributes about 12% of your basic pay to your Provident Fund. It's counted in CTC (it's a cost to the company), but it goes into your PF account, not your salary account. On a ₹15 lakh CTC with basic ≈ 50%, that's roughly ₹90,000/year that's "yours" but locked in PF.
2. Your own PF — deducted from your salary
You also contribute ~12% of basic to PF. This is your money and grows tax-free, but it's deducted before take-home — another ~₹90,000/year out of your monthly cash flow (and into your retirement savings).
3. Professional tax — small, state-specific
A small state levy, capped at ₹2,500/year in most states (often around ₹2,400). Minor, but it's there.
4. Income tax (TDS) — the big one
Your employer deducts income tax every month. On a ₹15 lakh salary under the new regime, that's about ₹97,500/year (see our detailed breakdown). This varies most with your regime choice and deductions.
Worked example: ₹15 LPA CTC
| Item | Amount / year |
|---|---|
| CTC | ₹15,00,000 |
| − Employer PF (not paid to you) | − ₹90,000 |
| = Gross salary | ₹14,10,000 |
| − Your PF | − ₹90,000 |
| − Professional tax | − ₹2,400 |
| − Income tax (new regime) | − ₹97,500 |
| = Annual in-hand | ≈ ₹12,20,000 |
| Monthly in-hand | ≈ ₹1,01,000 |
So a ₹15 LPA CTC lands around ₹1.0–1.05 lakh a month — not ₹1.25 lakh. The exact figure depends heavily on your basic pay percentage: a higher basic means more PF (more locked away, lower take-home now) but more retirement savings.
How to increase your take-home
- Choose the right tax regime. For most people without big deductions, the new regime lowers TDS and raises take-home.
- Understand your basic %. A lower basic means less PF deducted now (more cash), but less forced retirement saving — a trade-off, not free money.
- Use tax-free components where your structure allows (though the new regime removes most of these).
Remember: PF isn't "lost" — it's your money growing tax-free for retirement. The real surprise is just that CTC overstates your monthly cash. To see your own number with your CTC and basic %, use the calculator below.