Introduction

“4.5 LPA” refers to a person’s annual Cost to Company (CTC) of ₹4,50,000. But note that this doesn’t imply that you will be able to get the complete ₹4.5 lakhs in your bank account.

CTC is a worker’s pay, including benefits, bonuses, and other perks, and the other amount a company spends on that worker in a lifetime. However, your real monthly income, or in hand wage, is less due to obligatory deductions.

These deductions consist of:

Income Tax
Workers’ Provident Fund (EPF)
State-specific professional taxes vary.

In this post, I’ll go through what in-hand income looks like using a real-world example, if and how the old and new tax regimes differ, sample payslip, and some advice on how to increase your in-hand income.

Components of CTC at 4.5 LPA

Let’s understand how a ₹4.5 LPA salary is typically structured. Here’s a sample breakdown of CTC components:

Component	Monthly (₹)	Annual (₹)
Basic Salary	₹18,750	₹2,25,000
House Rent Allowance (HRA)	₹7,500	₹90,000
Special Allowance	₹5,000	₹60,000
Employer’s PF Contribution	₹2,250	₹27,000
Bonus / Gratuity / Other	₹4,000	₹48,000
Total CTC	₹37,500	₹4,50,000

Breakdown of Deductions

Now, let’s look at the common deductions from your salary:

Deduction Type	Monthly (₹)	Annual (₹)
Employee PF (12% of Basic)	₹2,250	₹27,000
Professional Tax (if applicable)	₹200	₹2,400
Income Tax (post rebate*)	₹0 – ₹5,000	₹0 – ₹5,000
Total Deductions	₹2,450 – ₹2,650	₹29,400 – ₹34,400

*If you opt for the New Tax Regime and your income is under ₹7L (with no major deductions), no tax is payable due to the Section 87A rebate.

In-Hand Salary Calculation (2025)

Category	Monthly (₹)	Annual (₹)
Gross Salary	₹37,500	₹4,50,000
Total Deductions	₹2,450 – ₹2,650	₹29,400 – ₹34,400
In-Hand Salary	₹34,850 – ₹35,050	₹4,15,600 – ₹4,20,600

So, your monthly in-hand salary is around ₹34,900, and your annual take-home comes close to ₹4.15L.

Old vs New Tax Regime Comparison

Tax Regime	Tax Payable (2025)	Net In-Hand (₹)
New Regime	₹0 (after rebate)	₹4,20,600 approx
Old Regime	₹0 (after 80C, HRA, etc.)	₹4,18,000 approx

If you invest under Section 80C (like PPF, ELSS, LIC) and pay rent, you can reduce taxable income under the Old Regime and still pay zero tax.

Sample Excel-Style Pay Slip (Monthly)

Particulars	Amount (₹)
Basic Salary	₹18,750
HRA	₹7,500
Special Allowance	₹5,000
Bonus	₹4,000
Gross Monthly Salary	₹35,250
(-) EPF (12%)	₹2,250
(-) Professional Tax	₹200
(-) Income Tax	₹0
Net In-Hand	₹32,800

Note: Bonuses may be paid quarterly or annually, depending on company policy.

How to Increase In-Hand Salary

Some clever ways to increase your monthly income:

Contribute investments that come under the Old Regime + 80C: PPF, ELSS, LIC, or 5-year FD.
Submittig your rent receipts will put lower your taxable income so you can claim HRA exemption.
Select gasoline reimbursements, LTA, and food coupons, which are all tax-free.
What to negotiate: Switch to basic PF to go with a flat salary and request lower variable pay.

FAQs Section

What is the monthly salary of 4.5 LPA in 2025?

A: Firstly, the cost can range from ₹34,850 to ₹35,050 as it is subject to deductions depending upon the Income Tax rates.

Is a 4.5 LPA income tax applicable?

A: Generally no, due to the Section 87A rebate under the new regime or tax-saving options under the old regime.

Which is better, the oldd or New Tax Regime for 4.5 LPA?

A: Bothhaven has zero tax; it simply depends on whether you make investments or pay rent. The Old Regime may grant more exemptions.

What part of the PF is deducted from the 4.5 LPA salary?

A: ₹2,250 per month or ₹27,000 annually (Employee’s share).

How can I avoid tax when I am on a 4.5 LPA Salary?

A: Yes, through Section 87A rebate (new regime) or 80C deductions and HRA (old regime).

What are the usual deductions in a 4.5 LPA job?

A: EPF, Professional Tax, and possibly Income Tax.

Who is paying the professional tax, and what is it?

A: It’s a state government tax on salaried employees. Usually around ₹200/month.

What could be the maximum I get in hand while I have this package?

A: Use tax saving methods, cut variable pay, and claim all the eligible exemptions

Conclusion

If you plan well, you will be able to pay no income tax per month at a ₹4.5 LPA salary (or a monthly in hand of ₹34.8K).

If you’re entitled to Section 87A (under the New regime) or you’ve baked in an exemption on 80C and HRA under the Old Regime, then all of your income can be tax-free.

While there is still a lot to be learned and strategized regarding the subject and the lifestyle that comes with it, it is important to first get the most out of your earnings through planning for savings, investing wisely, and setting your salary structure in a way that is respectful and financially advantageous for you. Also, whatever your background, when you’re a fresher or changing your job, it’s essential to know these pieces and parts, and it can be an art to manage your money and also build a secure future.