Take-home salary calculation for 2026-27: from CTC to in-hand pay, with tax under both regimes

Your take-home (in-hand) salary is your CTC minus the parts of it that are not paid to you each month (employer PF, gratuity provision, insurance, variable pay held back), minus your own deductions (employee PF, professional tax) and minus income tax deducted by the employer. For an illustrative ₹15 lakh CTC with a ₹7.5 lakh basic salary, in-hand pay under the new regime works out to about ₹1,02,800 a month. Under the old regime with typical rent, PF and insurance claims, the tax is about ₹24,700 a year higher. For an ₹8 lakh CTC, no income tax is due under the new regime, and monthly in-hand pay is about ₹60,500 with PF at the ₹25,000 ceiling.

These are examples to show the method. Salary structures vary a lot between employers, so use your own offer letter or salary slip.

Step 1: separate what you never receive monthly

CTC ("cost to company") often includes items that are not in your monthly credit:

Gross salary = CTC minus employer PF, gratuity, insurance and any variable pay not yet paid.

Step 2: subtract your own deductions

• Employee PF: usually 12% of basic. Some employers apply it only to the statutory wage ceiling, which rose from ₹15,000 a month (₹1,800 a month) to ₹25,000 a month (₹3,000 a month) from 17 September 2026 (S.O. 5109(E)). Under the labour codes PF is worked out on code "wages", which can be higher than basic.
• Professional tax: a state tax on employment, capped at ₹2,500 a year by the Constitution. Many states charge ₹200 a month, and some states charge none. It is deductible only in the old regime.
• Voluntary PF or NPS contributions, loan recoveries, canteen or transport charges.

Step 3: subtract income tax (TDS)

Your employer deducts tax every month under section 392 based on your estimated income for the year and the regime you declared. The TDS basics guide explains the mechanics.

Worked example: ₹15 lakh CTC

Illustrative structure: basic ₹7,50,000; HRA ₹3,00,000; special allowance ₹3,60,000; employer PF ₹90,000 (12% of basic). Gross salary = ₹14,10,000.

New regime

1. Total income = ₹14,10,000 − ₹75,000 = ₹13,35,000.
2. Slab tax = ₹20,000 + ₹40,000 + (₹1,35,000 × 15%) = ₹80,250.
3. No marginal relief, since the excess over ₹12 lakh (₹1,35,000) is more than the tax.
4. With cess: ₹83,460 a year, about ₹6,955 a month.
5. In-hand = ₹14,10,000 − ₹90,000 employee PF − ₹2,500 professional tax − ₹83,460 = ₹12,34,040 a year ≈ ₹1,02,837 a month.

Old regime (renting in Pune at ₹25,000 a month; PF ₹90,000 plus PPF ₹60,000; health insurance ₹25,000)

1. HRA exemption: least of ₹3,00,000 received, ₹3,00,000 rent − 10% of basic (₹75,000) = ₹2,25,000, and 40% of basic = ₹3,00,000. So ₹2,25,000 (see the HRA guide).
2. Total income = ₹14,10,000 − ₹2,25,000 − ₹50,000 − ₹2,500 − ₹1,50,000 − ₹25,000 = ₹9,57,500.
3. Slab tax = ₹12,500 + (₹4,57,500 × 20%) = ₹1,04,000. With cess ₹1,08,160.
4. The old regime costs ₹24,700 more a year here, and the PPF deposit and insurance premium also leave your account.

Worked example: ₹8 lakh CTC

Basic ₹4,00,000, employer PF on the capped wage at the ₹25,000 ceiling in force from 17 September 2026: 12% × ₹25,000 × 12 = ₹36,000 (for tax year 2026-27 itself, the months before 17 September used the old ₹15,000 ceiling). Gross salary ₹7,64,000.

• New regime: total income ₹6,89,000. Slab tax ₹14,450, cancelled by the rebate. Tax nil.
• In-hand = ₹7,64,000 − ₹36,000 PF − ₹2,400 professional tax (illustrative ₹200 a month) = ₹7,25,600 a year ≈ ₹60,467 a month.

Monthly ready reckoner (illustrative, new regime)

Subtract employee PF and professional tax as well to reach in-hand pay.

Why your monthly TDS changes during the year

• Bonus or arrears: the employer recalculates tax for the year and deducts more in the remaining months. Relief for arrears relating to earlier years is available under section 157 (formerly 89).
• Proofs not submitted in January to March under the old regime: the employer withdraws the claims and deducts more in the last months.
• Job change: the new employer does not know your earlier salary unless you tell them. See the common mistakes guide.

Ways to raise in-hand pay legally

1. Pick the cheaper regime using the old vs new regime comparison.
2. Ask for employer NPS in the new regime. It is deductible up to 14% of basic plus DA. This moves money into retirement savings rather than cash, but it can cut tax at the margin by 31.2%.
3. Use tax-free reimbursements your employer offers in the new regime, where the rules allow them. Many allowances are taxable in the new regime, so check your company's policy.

More examples are in the worked tax calculation guide.

Old-regime employees should also read the deductions guide and, if they own a home, the home loan interest guide.

Frequently asked questions

Is the employer's PF contribution taxable?

Not normally. It becomes taxable only if the employer's total contributions to PF, NPS and superannuation exceed ₹7.5 lakh in a year, or if interest is earned on employee contributions above certain annual limits.

Is HRA taxable in the new regime?

Yes. The HRA exemption is available only in the old regime.

Why does my salary slip show "income tax" even though my income is under ₹12 lakh?

Your employer may be applying the old regime or including a bonus. Check your regime declaration with HR.

Sources

• Income Tax Department: sections 19, 157, 202 and 392 of the Income-tax Act, 2025
• Employees' Provident Fund Organisation: PF contribution rules and wage ceiling
• Income Tax e-filing portal: salary TDS shown in Form 26AS