The example of when one receives an offer letter with a CTC of 19.5 LPA (Lakhs Per Annum) shows how a person thinks. The first inquiry which surfaces in his mind is “What is the total salary I will actually receive in hand by the end of the month?”.
Let us meticulously describe after calculating the salary box along with relevant expenses such as taxes, PF, professional tax, and other sundry deductions. This document is tailored mainly for employees on a payroll in India.
Understanding CTC
CTC (or “Cost to Company”) is essentially the summation figure that a company spends on an employee in a year. It practically incorporates beyond your standard salary, also includes:
- Provident Fund (PF);
- Gratuity
- Bonus
- Pamphlets of Insurance Premium and several other benefits like meal coupons, a company car, and many more.
But CTC does not say your base salary or ‘take home’.
Basic Assumptions
Let us consider the following state conditions for simplification:
- CTC = ₹19.5 Lakhs, in this case, per annum.
- Place of residence = Non-metro city
- Standard deduction = 50k
- HRA exemption or home loan interest not applicable.
- No investment for tax saving (like 80C, 80D)
- To adopted New Tax Regime (optional comparison is included)
- Employee PF = 12% of Basic Salary;
- Employer PF = CTC inclusive;
- No variable pay or bonuses.
Salary Structure (Estimated)
| Component | Amount (Annual) | Monthly (Approx.) |
| Basic Salary | ₹7,80,000 | ₹65,000 |
| House Rent Allowance | ₹3,12,000 | ₹26,000 |
| Special Allowance | ₹6,24,000 | ₹52,000 |
| Provident Fund (Employer) | ₹93,600 | ₹7,800 |
| Gratuity | ₹40,800 | ₹3,400 |
| Total CTC | ₹19,50,000 | ₹1,62,500 |
Deductions from Salary
| Deduction Type | Monthly Amount | Annual Amount |
| Employee PF (12% Basic) | ₹7,800 | ₹93,600 |
| Professional Tax | ₹200 | ₹2,400 |
| Income Tax (after rebate) | ₹22,000 (approx.) | ₹2,64,000 |
| Total Deductions | ₹30,000 | ₹3,60,000 |
Income Tax Calculation (FY 2024-25)
Let’s calculate tax under the New Tax Regime:
| Income Slab (New Regime) | Tax Rate | Tax Amount |
| 0 – ₹3,00,000 | 0% | ₹0 |
| ₹3,00,001 – ₹6,00,000 | 5% | ₹15,000 |
| ₹6,00,001 – ₹9,00,000 | 10% | ₹30,000 |
| ₹9,00,001 – ₹12,00,000 | 15% | ₹45,000 |
| ₹12,00,001 – ₹15,00,000 | 20% | ₹60,000 |
| ₹15,00,001 – ₹19,00,000 | 30% | ₹1,20,000 |
| Total Tax (Before Cess) | ₹2,70,000 | |
| Health & Education Cess (4%) | ₹10,800 | |
| Total Tax Payable | ₹2,80,800 |
Monthly In-Hand Salary
Let’s calculate your monthly take-home salary:
| Component | Amount (₹) |
| Gross Monthly Salary | ₹1,54,700 |
| (-) Employee PF | ₹7,800 |
| (-) Professional Tax | ₹200 |
| (-) Income Tax (Monthly Avg.) | ₹22,000 (approx.) |
| Net Monthly In-Hand Salary | ₹1,24,700 |
Annual Take-Home Salary
Let’s now look at your actual annual in-hand salary after all deductions:
| Detail | Amount (₹) |
| Gross Annual Salary | ₹18,15,600 |
| (-) Annual Deductions (Tax + PF + PT) | ₹3,60,000 |
| Annual In-Hand Salary | ₹14,55,600 |
Take-Home % of CTC
| Item | Value |
| CTC | ₹19,50,000 |
| Annual In-Hand | ₹14,55,600 |
| % Take-Home of CTC | 74.6% |
That means, out of your total CTC, you get to keep around 74.6% in hand. The rest goes to tax, PF, and statutory contributions.
How to Increase Your In-Hand Salary?
Here are a few ways to increase the take-home pay legally:
a. Opt for Old Tax Regime (If You Invest)
If you invest in 80C instruments (like PF, ELSS, LIC, PPF), claim HRA, and Section 80D (health insurance), the tax liability can reduce significantly.
| Tax Saving Option | Section | Max Deduction |
| PPF, EPF, ELSS, LIC | 80C | ₹1,50,000 |
| Health Insurance | 80D | ₹25,000 |
| HRA (Rent Paid) | 10(13A) | Varies |
b. Use Salary Restructuring
Ask your HR to structure salary with more non-taxable components, such as:
- Meal Vouchers
- Internet/Phone Reimbursement
- Leave Travel Allowance (LTA)
- Education Allowance
Summary of Key Figures
| Category | Amount (₹) |
| Total CTC | ₹19,50,000 |
| Gross Salary | ₹18,15,600 |
| Annual Tax | ₹2,64,000 |
| PF (Employee + Employer) | ₹1,87,200 |
| Annual In-Hand | ₹14,55,600 |
| Monthly In-Hand | ₹1,24,700 approx. |
Visual Flow (Step-by-Step)
- CTC: ₹19.5 LPA
- Minus Employer PF + Gratuity = ₹18.15 LPA (Gross)
- Minus Income Tax, PF (Employee), PT = ₹3.6 LPA
- In-Hand = ₹14.55 LPA (~₹1.24L per month)
Final Thoughts
The industry you’re trying to break into might have set a 19.5 LPA CTC, but in reality only a fraction of that will make it into your hand after statutory deductions. Still, with proper tax planning, there are ways to reduce the amount of tax you pay and increase your take home salary. Your company HR along with your tax consultant can help tailor personalized saving schemes to suit your situation.
FAQs
What is the in-hand amount per month if CTC is 19.5 LPA?
Roughly ₹ 1,24,000 per month after taxes, PF, and other expenses.
Is part of the in-hand salary also the employer’s PF contribution?
No, the employer’s PF contribution is CTC but not part of the take home salary.
If I make an investment under 80C, will it lower my tax?
Yes, as long as you invest in PPF, ELSS, or LIC, they will lower your tax burden if you select the old tax regime.
Is professional tax applied in every state?
No, only some provinces in India impose professional tax with varying amounts.
If I change to the new regime, how much income tax will I owe for 19.5 LPA?
About ₹2.64 lakh every year assuming no exemptions or tax relief.
