CTC vs In-Hand Salary: What 12 LPA Really Pays You Each Month (2026-27)

An offer letter for "12 LPA" sounds like ₹1 lakh a month. The amount that actually reaches your bank account is closer to ₹85,000. This guide shows where the rest goes, and what you can expect at different CTC levels for tax year 2026-27.

CTC, gross salary and in-hand salary

• CTC (cost to company): everything your employer spends on you in a year.
• Gross salary: what your employer pays to you. It is CTC minus items that go elsewhere:
  • the employer's PF contribution, which goes into your EPF account
  • gratuity, which you receive only when you leave after five years
  • any employer NPS contribution
  • variable pay or bonus, which is paid separately, often once a year
• In-hand (net) salary: gross salary minus your own PF contribution, professional tax and income tax (TDS).

A worked example: 12 LPA

Take a common structure: basic is 50% of CTC, HRA is 40% of basic, and PF is 12% of the full basic.

1. Basic: ₹6,00,000 a year.
2. Employer PF: 12% of basic, ₹72,000.
3. Gratuity: 4.81% of basic, ₹28,860.
4. Gross salary: ₹12,00,000 − ₹72,000 − ₹28,860 = ₹10,99,140.
5. Your PF: another ₹72,000, deducted from your pay.
6. Professional tax: ₹2,500 a year in most states that levy it.
7. Income tax, new regime: taxable income is ₹10,24,140 after the ₹75,000 standard deduction. That is under ₹12 lakh, so the rebate makes the tax zero.
8. In-hand: (₹10,99,140 − ₹72,000 − ₹2,500) ÷ 12 = ₹85,387 a month.

Under the old regime, with only your PF counted under 80C, the tax is ₹1,11,725 a year. That leaves ₹76,076 a month, so most people at this salary are better off in the new regime.

In-hand salary from 6 LPA to 50 LPA

These figures use the same structure: basic at 50% of CTC, PF on the full basic, gratuity inside the CTC, ₹2,500 professional tax and no variable pay.

Typically, in-hand pay is 65–85% of CTC ÷ 12. The share falls as income tax rises.

Five things that change your in-hand pay

1. How your employer calculates PF

On 17 September 2026 the EPF wage ceiling rose from ₹15,000 to ₹25,000 a month, which gives employers two common options:

• PF on the full basic: 12% of your full basic is deducted from you, and your employer adds the same amount. At 12 LPA that is ₹6,000 a month each.
• PF capped at the ceiling: only 12% of ₹25,000 is deducted, ₹3,000 a month, and your employer adds ₹3,000.

At 12 LPA, the capped option raises in-hand pay to about ₹91,400 a month, but less goes into your retirement savings. Your offer letter or HR team can tell you which option your employer uses.

2. The labour codes' 50% rule

Under the new labour codes, basic pay plus DA must be at least half of your total pay. If your employer used to keep basic low and allowances high, your basic goes up. That raises PF and gratuity, so in-hand pay can dip slightly even though the CTC is unchanged.

3. Variable pay and bonus

A bonus is part of the CTC but is paid separately, and it can be taxed more heavily than you expect.

Example: on a ₹15 lakh CTC with ₹1.5 lakh of variable pay:

• The fixed salary alone stays under the ₹12 lakh rebate limit, so it is tax-free.
• The bonus pushes taxable income above ₹12 lakh, so tax becomes due on the whole income.
• About ₹77,800 of the ₹1.5 lakh bonus goes in tax.

4. Employer NPS

Employer contributions to NPS of up to 14% of basic are tax-free in the new regime. Moving part of your CTC into employer NPS can cut your tax, but that money stays locked until retirement.

5. Where you live

• Professional tax: up to ₹2,500 a year in states such as Maharashtra, Karnataka, West Bengal and Tamil Nadu. Delhi, Haryana, Uttar Pradesh and Rajasthan don't levy it.
• HRA exemption: applies only in the old regime. It is larger in Delhi, Mumbai, Kolkata and Chennai, where up to 50% of basic can be exempt, compared with 40% elsewhere.

Questions to ask before accepting an offer

• What share of the CTC is fixed, and what share is variable? Is the variable part guaranteed?
• Is PF calculated on the full basic or capped at ₹25,000?
• Is gratuity included in the CTC?
• Is any part of the CTC made up of joining bonuses, ESOPs or insurance premiums, which you won't get monthly?

Calculate yours

Enter your own CTC and salary structure in the in-hand salary calculator. It shows your monthly pay under both regimes, your variable pay after tax, and the full CTC breakup. To check your tax in detail, use the income tax calculator. To see how your PF builds up by retirement, try the EPF calculator.

Figures are estimates for tax year 2026-27 and assume no other income. Your payslip may differ slightly depending on how your employer spreads TDS across the year.