For specialists in fields like information technology, consulting, finance, data science, and management, receiving a pay package of 18 LPA (Lakhs Per Annum) is a noteworthy accomplishment. It shows market worth as well as professional advancement. There is a significant discrepancy between your CTC (Cost to Company) and the actual wage that is paid to you each month, as the majority of salaried workers rapidly discover.
Before the employee’s pay is deposited into their bank account, several statutory deductions are made, such as income tax, Provident Fund (PF) payments, Professional Tax (PT), insurance premiums, and others.
This post will explain how an 18 LPA package appears after taxes, PF payments, and other deductions, and it will provide you with a clear image of your expected monthly in-hand wage.
Understanding 18 LPA CTC
- Annual CTC: ₹18,00,000
- Monthly CTC: ₹1,50,000
CTC stands for the basic salary, house rent allowance (HRA), the special bonuses if any, and the employer’s contribution to pension fund (PF), the gratuity, and other company benefits in the form of insurance.
Important: You do not get the entire CTC as your take home salary. There are several
deductions before the final payout.
Typical Salary Structure for 18 LPA
A normal 18 LPA CTC might be split as follows:
| Salary Component | Annual Amount (Approx.) | Monthly Amount (Approx.) |
| Basic Salary | ₹7,20,000 | ₹60,000 |
| HRA (House Rent Allowance) | ₹3,60,000 | ₹30,000 |
| Special Allowance | ₹5,40,000 | ₹45,000 |
| Employer’s Contribution to PF | ₹86,400 | ₹7,200 |
| Gratuity | ₹69,200 | ₹5,766 |
Major Deductions from Salary
First understand the typical deductions that will affect your in hand salary.
Employee Provident Fund (EPF)
12% of Basic Salary is deducted.
12% of ₹7,20,000 = ₹86,400 annually (₹7,200 monthly).
Professional Tax (PT)
Most states costs around ₹200 per month.
Income Tax
It is calculated on the basis of old tax regime (with deductions) or new tax regime (with lower tax rates but no exemptions).
Insurance Premiums
Group health insurance are being deducted for a sum of ₹500 to ₹1,000 per month by some companies.
Income Tax Calculation for 18 LPA
Let’s calculate income tax under both the New Regime and the Old Regime.
1. New Tax Regime (No Deductions)
| Income Slab | Tax Rate | Tax Payable |
| 0 – 3 lakh | 0% | ₹0 |
| 3 lakh – 6 lakh | 5% | ₹15,000 |
| 6 lakh – 9 lakh | 10% | ₹30,000 |
| 9 lakh – 12 lakh | 15% | ₹45,000 |
| 12 lakh – 15 lakh | 20% | ₹60,000 |
| 15 lakh – 18 lakh | 30% | ₹90,000 |
Total Tax = ₹15,000 + ₹30,000 + ₹45,000 + ₹60,000 + ₹90,000 = ₹2,40,000
- Add 4% Cess: ₹9,600
- Total Tax Payable: ₹2,49,600 annually (~₹20,800 monthly)
2. Old Tax Regime (With Exemptions)
Suppose you claim:
₹1.5 lakh under 80C (PF, ELSS, PPF)
₹50,000 standard deduction
₹50,000 under 80D (medical insurance)
Around ₹15.5 lakh is the reduction to your taxable income.
Tax calculation on ₹15.5 lakh:
0 – 2.5 lakh: 0%
2.5 – 5 lakh: 5% = ₹12,500
5 – 10 lakh: 20% = ₹1 lakh
10 – 15 lakh: 30% = ₹1.5 lakh
15 – 15.5 lakh: 30% = ₹15,000
Here, the Total Tax amount is given as ₹12,500 + ₹1,00,000 + ₹1,50,000 + ₹15,000 = ₹2,77,500.
Add 4% Cess: ₹11,100
Total Tax Payable: ₹2,88,600 annually (~₹24,050 monthly)
Important Note:
If you have major deductions, then New regime is slightly more tax efficient.
It is possible that maximizing tax saving investments may lead older regime to perform better.
Other Deductions
| Type | Monthly Deduction (Approx.) |
| EPF | ₹7,200 |
| Professional Tax | ₹200 |
| Insurance (If any) | ₹500–₹1000 |
| Income Tax | ₹20,800 (New Regime) or ₹24,050 (Old Regime) |
Final In-Hand Salary Calculation
Under New Tax Regime
| Description | Amount |
| Monthly CTC | ₹1,50,000 |
| Minus Employer’s PF + Gratuity (₹7,200 + ₹5,766) | ₹12,966 |
| Gross Salary (Before employee deductions) | ₹1,37,034 |
| Minus EPF (₹7,200) | ₹1,29,834 |
| Minus Income Tax (₹20,800) | ₹1,09,034 |
| Minus Professional Tax + Insurance (~₹700) | ₹1,08,334 |
Estimated Monthly In-Hand Salary: ₹1,08,000
Under Old Tax Regime
| Description | Amount |
| Monthly CTC | ₹1,50,000 |
| Minus Employer’s PF + Gratuity | ₹12,966 |
| Gross Salary | ₹1,37,034 |
| Minus EPF | ₹7,200 |
| Minus Income Tax | ₹24,050 |
| Minus Professional Tax + Insurance (~₹700) |
Estimated Monthly In-Hand Salary: ₹1,05,000
How to Maximize Your In-Hand Salary?
Too late for the Tax Saving Instruments like 80C, 80D, 80CCD(1B) …
Structure Salary Better: Opt for allowances like fuel reimbursements, internet reimbursements, and meal vouchers.
If you are living in rented accommodation, then submit rent receipts under HRA Benefits.
Annual evaluation based on available deductions every year.
Another way to save more tax is to use NPS: NPS offers an extra deduction of ₹50,000 beyond 80C.
Conclusion
Depending on how much you can negotiate with your managerial expectations and contemporary life, your in-hand salary could be between ₹1,05,000 to ₹1,08,000 per month for an 18 LPA package.
It is always important to understand your salary structure, optimize tax saving investments and fund yourself ahead of time so that you can make the most of your paid salary.
Remember, gross income is important, but it’s net (in-hand) income that decides what your lifestyle, investments, and savings are!
FAQ’s
So, how many salary terms does that as 18 LPA represent?
Your Cost to Company (CTC) is equivalent to 18 LPA, i.e., ₹18 Lakhs Per Annum. This includes your basic pay, house rent allowance (HRA), all special allowances, the employer’s part of the contribution to the provident fund, gratuity, insurance, and other such benefits.
As much as 18 LPA will I get in hand?
No. Salary as you receive, after deduction of income tax, employee PF, Professional tax, and insurance premium, is your in-hand salary. Assuming the tax regime is 18 LPA CTC, your monthly in-hand salary will be around ₹1.05 (or less for deductions) to ₹1.08 (or more for deductions) lakh.
What will be the tax amount of 18 LPA?
- With the new tax regime, the tax comes to just over ₹2.49 lakh annually.
- When we deduct them, 80C and 80D, it comes up to ₹2.88 lakh under the old tax regime.
I should choose which tax regime for 18 LPA?
- The new regime is better if you don’t claim deductions such as 80C, HRA, etc.
- If you have considerable deductions, the old regime can save you more.
What will EPF be deducted from my salary?
- Employee Provident Fund (EPF) is deducted at 12% of your basic salary.
- EPF monthly comes under ₹7,200 per month, and for a basic salary of ₹60,000 per month.
