If you work for a salary job in India, you may have glanced at your payslip and asked where the final amount came from. The move from your yearly CTC to the cash you get each month is not one direct step. It usually involves rules from the government, plus a few calculations that HR runs through.
For FY 2026 to 2027, it matters even more to know the flow. If you are checking a new offer or you just want clearer numbers for your own budget, use this guide to estimate your in-hand pay.
Key parts of your pay
Before you start the math, get these three terms right.
- CTC (Cost to Company): What the company spends for you each year. It covers your basic pay, different allowances, employer PF, and gratuity too.
- Gross salary: This is your CTC after removing the employer side retirement parts, such as employer PF and gratuity. You can think of it as the amount that becomes taxable, before you apply your own deductions.
- Net or in-hand salary: This is what is left after mandatory cuts from your gross pay. Examples are employee PF, professional tax, and income tax.
Step 1: Remove employer retirement amounts
To reach your in-hand salary, start by turning CTC into gross salary. You do this by excluding the portion of CTC that does not enter your monthly bank balance.
Check your offer letter. Find the employer contribution to the provident fund, also called EPF. Under the rules, the employer puts in 12% of your basic salary into your EPF. This part is counted inside CTC, but it is paid to your retirement account instead of your salary payout each month.
Find the Gratuity part. In most cases, it is worked out as 4.81% of your Basic Salary. The amount is held back by the employer. You get it only after you finish five straight years at the job.
How it is calculated:
Gross Salary = CTC - (Employer EPF Contribution + Gratuity + Employer Insurance Premiums)
Step 2: Subtract your own payments
After you know your Gross Salary, you still need to remove the required cuts taken from your share.
Your largest personal cut is the EPF amount you pay yourself. You also have to put in 12% of your Basic Salary to the Provident Fund. This is taken from your Gross Salary each month.
You should also include Professional Tax. This is a small tax that is set by the state for salaried staff. The rate depends on where you live. For example, in Maharashtra, Karnataka, or Telangana, it is usually around ₹150 to ₹200 each month.
Calculation:
Taxable Salary = Gross Salary - (Employee EPF Contribution + Professional Tax)
If you do not want to calculate by hand, you can use a tool instead. Check your exact take-home pay fast with JobYaar’s free In-Hand Salary Calculator for FY 2026-27.
Step 3: Calculate Your Income Tax (TDS)
After you add up your salary components, the next part is income tax. Your company takes this money out each month as TDS.
For FY 2026-27, you have to pick a tax setup. You can go with the Old Tax Regime or the New Tax Regime. This pick changes what you get in hand.
- New Tax Regime: Tax rates are lower in the slabs. But you usually cannot use many common tax breaks. This includes most deductions such as HRA and many Section 80C claims. Many people choose it, especially if they are new to the job or do not have big eligible investments.
- Old Tax Regime: Slab rates are higher. At the same time, you can lower your taxable income by using allowed exemptions. This includes rent related benefits, health insurance, and tax saving mutual funds.
After your HR team estimates your yearly tax based on the option you chose, they take the total and spread it across 12 months. Then the same amount is deducted from your monthly pay.
Final Calculation:
Monthly In-Hand Salary = (Taxable Salary / 12) - Monthly TDS
A Simple Worked Example
Now, let’s use the same method. Take a professional in Hyderabad with a CTC of ₹8,00,000 per year. Assume the Basic Salary is ₹3,20,000, which is 40% of the CTC. Step 1: Gross salary total
- Total CTC: ₹8,00,000
- Less employer EPF (12% of basic): ₹38,400
- Less gratuity (4.81% of basic): ₹15,392
- Annual gross salary: ₹7,46,208
Step 2: Taxable salary
- Start with annual gross salary: ₹7,46,208
- Less employee EPF (12% of basic): ₹38,400
- Less professional tax (₹200 for 12 months): ₹2,400
- Annual taxable salary: ₹7,05,408
Step 3: Net salary under the new tax setup
- Estimated annual TDS: ₹15,000
- Annual net salary: ₹7,05,408 - ₹15,000 = ₹6,90,408
- Monthly in hand: ₹6,90,408 ÷ 12 = ₹57,534
Final notes
You do not need a finance degree to work out your in-hand pay. You just need to read the split in your offer letter. Take out the employer amounts, then deduct your own EPF and professional tax, and finally subtract TDS. That sequence gives you a close view of what lands in your account each month.
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FAQ
If I do not pick a tax regime, what will happen?
For FY 2026-27, the New Tax Regime will be treated as the default. If you do not tell your HR team in writing that you want the Old Tax Regime, your TDS will be calculated using New Tax Regime rates.
Is House Rent Allowance (HRA) taxable?
This depends on which tax regime you use. In the New Tax Regime, HRA is taxable in full. In the Old Tax Regime, you may get exemptions for HRA if you submit proper rent receipts to your employer, and only to the extent allowed by the rent you actually paid.
Can I lower my EPF so I get more in-hand pay?
It is linked to your Basic Salary. If your Basic Salary is under ₹15,000 per month, the 12% EPF contribution is required by law. If it is above that limit, you can choose not to contribute or limit the amount when you join a new company. Still, many Indian IT and corporate organizations treat EPF as compulsory for employees.
Practical Tips
- Stay Updated: Always keep abreast of the latest trends in the job market to better position yourself.
- Prepare Thoroughly: Whether it's for an interview or updating your resume, taking the time to prepare gives you a distinct advantage.
- Leverage Tools: Use tools like our CTC Calculator and Resume Builder to simplify complex tasks and ensure accuracy.
- Network Continuously: Building relationships is just as important as building skills.