About this decoder
The India CTC to In-Hand Salary Decoder reverse-engineers any Indian offer letter so you see the exact rupee amount that lands in your bank account each month. It handles the seven moving parts of every Indian compensation package: basic, HRA, special allowance, employer PF, gratuity, variable pay, and ESOPs, then applies both the Old and New regime tax math for FY 2025-26 (Assessment Year 2026-27).
Indian CTCs are misleading by design. A ₹5 LPA offer often delivers only ₹37,000-39,000 to your bank because employer PF, employer gratuity, group insurance, and EPF admin charges all live inside the headline number but never reach your salary slip. This decoder applies every statutory deduction (employee PF, professional tax, income tax with 4% cess) under both regimes and tells you the real monthly credit.
FY 2025-26 tax brackets used
New Regime (default for FY 2025-26)
| Income slab | Rate |
|---|---|
| 0 to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard deduction: ₹75,000. Section 87A rebate makes income up to ₹12L tax-free (marginal relief beyond). 4% Health and Education Cess applies on tax.
Old Regime
| Income slab | Rate |
|---|---|
| 0 to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard deduction: ₹50,000. Section 87A rebate up to ₹12,500 if taxable income is up to ₹5L. Allows HRA, 80C (₹1.5L), 80CCD(1B) (₹50K NPS), 80D (₹25-75K), 24(b) home loan interest (₹2L self-occupied).
Surcharge (both regimes)
- Income above ₹50L to ₹1Cr: 10% surcharge
- Above ₹1Cr to ₹2Cr: 15% surcharge
- Above ₹2Cr to ₹5Cr: 25% (Old) / 25% (New)
- Above ₹5Cr: 37% (Old) / 25% (New, capped under Finance Act 2023)
HRA exemption formula
HRA exempt = min(
Actual HRA received,
50% of basic (metro) or 40% of basic (non-metro),
Annual rent paid - 10% of basic
)
Actual HRA received,
50% of basic (metro) or 40% of basic (non-metro),
Annual rent paid - 10% of basic
)
Only Mumbai, Delhi, Chennai, and Kolkata count as metro for HRA purposes under Section 10(13A). Bengaluru, Hyderabad, Pune, Gurgaon, Noida, and Ahmedabad are non-metro at 40%. If rent paid is less than 10% of basic, no HRA is exempt.
Worked example: ₹15 LPA offer in Bengaluru
Software engineer, ₹15,00,000 CTC. Basic 40% (₹6L). HRA 50% of basic (₹3L). Rent ₹25,000/mo (₹3L/yr). PF capped (₹1,800/mo). No gratuity, no ESOPs, no variable. Lives in Bengaluru (non-metro for HRA).
| Component | Old regime | New regime |
|---|---|---|
| Gross salary (CTC - employer PF) | ₹14,78,400 | ₹14,78,400 |
| Standard deduction | (₹50,000) | (₹75,000) |
| HRA exempt | (₹2,40,000) | - |
| 80C (Employee PF + ELSS) | (₹1,50,000) | - |
| Taxable income | ₹10,38,400 | ₹14,03,400 |
| Tax + 4% cess | ₹1,29,989 | ₹94,130 |
| Employee PF (annual) | (₹21,600) | (₹21,600) |
| Professional tax | (₹2,400) | (₹2,400) |
| In-hand / year | ₹13,24,411 | ₹13,60,270 |
| In-hand / month | ₹1,10,367 | ₹1,13,356 |
New regime wins by ~₹2,989/mo for this profile. Old regime needs a home loan (₹2L interest) or higher 80C top-up before the deduction stack overtakes the lower new-regime slabs.
Frequently asked questions
Why is my ₹5 LPA offer only ₹37,000/mo in hand?
Employer PF (₹1,800/mo × 12), gratuity provision (4.81% of basic), group insurance, and EPF admin charges sit inside the CTC headline but never enter your bank account. Subtract employee PF (₹1,800/mo) and professional tax (₹200/mo) from your gross monthly, then the new regime delivers approximately ₹37,000-39,000 net at this level since the 87A rebate keeps income tax at zero up to ₹12L.
Can I switch tax regimes between Old and New?
Salaried employees can switch each financial year when filing ITR. Business owners and professionals can only switch once back to Old after opting New (per Section 115BAC). Declare your choice to your employer in April to align TDS.
How is HRA exemption calculated?
Min of: (a) actual HRA received, (b) 50% basic if metro / 40% if non-metro, (c) rent paid minus 10% of basic. The lowest of the three is exempt; the remainder is taxable. Only available under Old Regime.
Is gratuity always part of CTC?
It depends on the employer. Statutorily gratuity is paid only after 5 years of continuous service, and accounting-wise it is a provision (4.81% of basic per year). Some employers list it in CTC for transparency, others do not. Toggle gratuity off in the decoder if your offer letter does not list it.
What is the 80C limit for FY 2025-26?
₹1,50,000 aggregate across PPF, ELSS, employee EPF, life insurance premiums, NSC, 5-year FD, tuition fees, principal repayment of home loan. Available under Old Regime only. Section 80CCD(1B) adds another ₹50,000 specifically for NPS.
Does the New Regime allow any deductions?
Only standard deduction (₹75,000) and Section 80CCD(2) for employer NPS contribution. HRA, 80C, 80D, 80CCD(1B), 24(b) home loan interest are all disallowed under the New Regime.
How does the 87A rebate work in FY 2025-26?
Under the New Regime, if your taxable income is up to ₹12,00,000, you get a rebate equal to your computed tax, making net tax zero. With ₹75K standard deduction, this means a salary of up to ₹12.75L pays no income tax. Marginal relief applies just above ₹12L so a salary slightly above does not jump straight into full tax. Old Regime caps the rebate at ₹12,500 for income up to ₹5L.
Why does the decoder show different in-hand from my company portal?
Companies sometimes include EPF admin charges (0.5% on PF wages), employer ESI contribution, group health premium, or one-time joining bonus as part of CTC. Configure the basic % and gratuity / ESOPs / variable toggles to match your specific offer letter components.
Sources and methodology
- Income Tax Department (incometax.gov.in): Slab structure FY 2025-26 per Finance Act 2025 amendments to Section 115BAC and Section 87A.
- Employees' Provident Fund Organisation (epfindia.gov.in): 12% PF contribution rate and ₹15,000/mo wage cap per EPF and MP Act 1952.
- Income Tax Act 1961, Section 10(13A): HRA exemption formula and metro / non-metro classification.
- Section 80C, 80D, 80CCD(1B), 24(b): Deduction limits applicable for AY 2026-27 under Old Regime.
- Payment of Gratuity Act 1972: Gratuity formula 15/26 of last drawn basic × years of service, eligible after 5 years.
- Article 276 of the Constitution: Professional tax capped at ₹2,500/yr per individual.