The salary amount of 21 LPA (Lakhs Per Annum) creates a fantasy for several Indian professionals in their professional life. Every month only a portion of your 21 LPA pay remains after taxation together with Provident Fund (PF) and other required deductions. This piece explains the process through practical examples together with basic tables and straightforward explanations.
What Does 21 LPA Mean?
A salary of 21 LPA represents an annual Cost to Company (CTC) amount of ₹21,00,000.
But CTC includes:
- Basic Salary
- House Rent Allowance (HRA)
- Provident Fund (Employer Contribution)
- Gratuity
- Bonuses (variable)
- Perks or Allowances
- So, in-hand salary ≠CTC.
General CTC Structure for 21 LPA
Let’s assume the following CTC structure, which is common in many IT, finance, and consulting firms:
| Component | Amount (Annual) | % of CTC |
| Basic Salary | ₹8,40,000 | 40% |
| House Rent Allowance (HRA) | ₹4,20,000 | 20% |
| Special Allowance | ₹5,04,000 | 24% |
| Bonus/Variable Pay | ₹1,26,000 | 6% |
| Employer PF Contribution | ₹1,00,800 | 4.8% |
| Gratuity | ₹40,320 | 1.92% |
| Total CTC | ₹21,00,000 | 100% |
Monthly Salary Before Deductions
Let’s first remove employer contributions and bonuses from CTC to find the fixed monthly gross salary.
Step 1: Exclude Employer PF, Gratuity, and Bonus
| Component | Amount (Annual) |
| Total CTC | ₹21,00,000 |
| Minus Employer PF | ₹1,00,800 |
| Minus Gratuity | ₹40,320 |
| Minus Bonus (Variable) | ₹1,26,000 |
| Fixed Salary (Annual) | ₹18,32,880 |
| Fixed Monthly (Approx) | ₹1,52,740 |
Monthly Deductions Breakdown
1. Employee Provident Fund (EPF)
12% of Basic Salary =
12% of ₹70,000 = ₹8,400/month
2. Professional Tax (State Dependent)
Let’s assume you are in Maharashtra:
₹200/month
3. Income Tax (Approximate)
Use old regime for simplicity and deductions. We will calculate it in the next section.
Income Tax Calculation on 21 LPA
Assume old regime with 80C investment (PF, ELSS, LIC, etc.) = ₹1,50,000
Step-by-Step Tax Calculation (Old Regime)
| Slab | Rate | Taxable Amount | Tax |
| Up to ₹2.5L | 0% | ₹2,50,000 | ₹0 |
| ₹2.5L to ₹5L | 5% | ₹2,50,000 | ₹12,500 |
| ₹5L to ₹10L | 20% | ₹5,00,000 | ₹1,00,000 |
| ₹10L to ₹19.5L (after 80C) | 30% | ₹9,50,000 | ₹2,85,000 |
| Total Tax (before cess) | ₹3,97,500 | ||
| 4% Cess on Tax | ₹15,900 | ||
| Total Tax Payable | ₹4,13,400 |
Monthly TDS Deducted
₹4,13,400 ÷ 12 = ₹34,450 approx.
Total Monthly Deductions
| Deduction Type | Monthly Amount |
| Employee PF (12%) | ₹8,400 |
| Professional Tax | ₹200 |
| Income Tax (TDS) | ₹34,450 |
| Total Deductions | ₹43,050 |
In-Hand Monthly Salary
| Item | Amount |
| Gross Fixed Monthly Salary | ₹1,52,740 |
| Minus Deductions | ₹43,050 |
| In-Hand Salary | ₹1,09,690 |
Yearly In-Hand Salary (Fixed Component)
| Item | Amount |
| Monthly In-Hand | ₹1,09,690 |
| Annual (12 months) | ₹13,16,280 |
Bonus Payout After Tax
Assume ₹1,26,000 bonus paid yearly. It’s fully taxable.
Tax at 30% slab + 4% cess = ~31.2%
Post-tax bonus = ₹1,26,000 – 31.2% = ₹86,512
Total Annual In-Hand with Bonus
₹13,16,280 + ₹86,512 = ₹14,02,792
Summary Table: Yearly Salary Distribution
| Component | Amount (₹) |
| Total CTC | ₹21,00,000 |
| Employer PF + Gratuity | ₹1,41,120 |
| Bonus (Pre-Tax) | ₹1,26,000 |
| Income Tax | ₹4,13,400 |
| Employee PF | ₹1,00,800 |
| In-Hand (Annual Fixed) | ₹13,16,280 |
| In-Hand (With Bonus) | ₹14,02,792 |
In-Hand Comparison: Old Regime vs New Regime
| Regime | Annual In-Hand (₹) | Monthly (₹) |
| Old Regime (80C benefit) | ₹14,02,792 | ₹1,16,899 |
| New Regime (no 80C) | ₹13,60,000 approx | ₹1,13,333 |
Factors That Can Change Your In-Hand Salary
- City of residence (affects HRA exemption)
- Investment declarations (under 80C, 80D etc.)
- Bonus payout structure (quarterly, yearly, withheld)
- New vs Old Tax Regime
- Company-specific perks (food cards, tax-free reimbursements)
Tips to Maximize In-Hand Salary
Use 80C fully: Invest in PF, ELSS, PPF, LIC, etc.
Claim HRA: Submit rent receipts if living in rented house.
Use Section 80D: Claim health insurance premium.
Choose tax-efficient perks: Food coupons, internet bills, LTA.
Plan bonus taxes: Spread it to avoid pushing slab.
Final Thoughts
Your monthly salary will range between ₹1.1 to ₹1.17 lakhs after taxes depending on your taxation policies and investment approach when you earn a 21 LPA salary. Taxes along with PF withdrawals reduce your income but proper financial strategy will increase your final monthly payment.
FAQs
What is the monthly in-hand payment on 21 LPA?
Post-tax deductions amount to ₹1.09 to ₹1.17 lakhs per month as in-hand salary for someone earning 21 LPA.
What will be a 21 LPA salary tax liability?
The annual tax amount stretches from ₹4.1 to ₹4.4 lakhs based on your claims and selected taxation system.
Does 21 LPA include bonuses?
A variable bonus component exists in the package although it remains taxable while excluding itself from the monthly salary that reaches your hands.
Can I reduce tax on 21 LPA?
The application of Section 80C, 80D, HRA together with the old tax regime structure enables tax reduction.
What is the salary of 21 LPA stands as an acceptable level of compensation for India?
The profession has strong potential for a high salary particularly when professionals work in technology or finance sectors or belong to the 30 years or younger group.
