How do I calculate CTC and in-hand salary when I hire in India?
Work down from CTC in three steps. First take out what the employer pays on top of pay: under the Labour Codes basic (with DA) must be at least half of total pay, employer and employee each put 12% of basic into PF, and gratuity is provisioned at 4.81% of basic. Then deduct the employee's PF and professional tax (at most Rs 2,500 a year, set by your state). Last, income tax: in the new regime for FY 2026-27, taxable income up to Rs 12 lakh pays nothing, after a Rs 75,000 standard deduction. Worked example on Rs 10 lakh CTC: basic Rs 5 lakh, employer PF Rs 60,000 and gratuity Rs 24,050 leave a gross of Rs 9,15,950; employee PF Rs 60,000 and professional tax Rs 2,500 leave Rs 8,53,450 a year, about Rs 71,100 a month, with no TDS. Many employers restrict PF to the statutory wage ceiling, Rs 25,000 a month since 17 September 2026, which caps each side at Rs 3,000 a month and raises take-home for higher earners.
Works CTC down to in-hand pay before and after the Labour Codes for several CTC levels, showing basic moving to 50% of CTC, PF at 24% of basic (employer plus employee) and gratuity provisioned at 4.81% of basic.
Where basic is already 50% of CTC, in-hand pay does not change.
Employers that restrict PF to the wage ceiling keep in-hand pay steadier; the ceiling rose from Rs 15,000 to Rs 25,000 a month on 17 September 2026, after this article, so the restricted contribution is now Rs 3,000 a month, not Rs 1,800.
Gratuity in CTC is paid only after five years of service.
An April 2026 worked example, with a tax expert, of how the Labour Codes' uniform definition of wages (basic, DA and retaining allowance at least 50% of total pay) reshapes a Rs 6 lakh CTC and its PF and gratuity.
A current table of the new and old regime slabs for FY 2026-27: under the new regime no tax is payable on income up to Rs 12 lakh because of a Rs 60,000 rebate, and salaried people also get a Rs 75,000 standard deduction.
The Income Tax Department's own calculator for working out tax under the old and new regimes for a given income, which is how to check the TDS line of any offer.
This breaks down the four things you will run monthly (TDS under Section 192, PF via UAN, ESI for sub-21,000 wages, PT capped at 2,500 a year) and ties each to what a payroll provider actually automates, so you can decide what to hand to RazorpayX Payroll, Zoho, or Keka instead of filing 24Q by hand. It answers the exact 'do I need an HR hire yet' question: no, you need TAN, TRACES, and a payroll tool.
An employer's guide, from an Indian payroll company, to the four Labour Codes that took effect on 21 November 2025 and replaced 29 older laws, covering the new wage definition, fixed-term gratuity, appointment letters and gig-worker social security.
EPFO's own FAQ on the wage ceiling rising from ₹15,000 to ₹25,000 a month from 17 September 2026 under the Code on Social Security, with worked contributions: 12% from the employee, 12% from the employer (8.33% to EPS), 0.5% EDLI and 0.5% admin charges.
