Earn More · 7 min read
CTC vs in-hand salary: where the rest of your package goes
A ₹12 lakh CTC does not pay ₹1 lakh a month. Here is every line that sits between the offer letter and your bank account.
Krish Dalal
Founder and editor, PaisaExpert. Master's in Business Management, London. · Last updated 2026-08-21
Cost to Company is exactly what it says: everything the employer spends on you in a year. It was never a promise of what reaches your account, but because it is the number on the offer letter, it is the number people plan their rent around.
Every line between CTC and your account
| Line | On a ₹12,00,000 CTC | Who it goes to |
|---|---|---|
| Employer PF contribution | ₹21,600 to ₹43,200 | Your EPF account, not your bank |
| Gratuity provision | About ₹17,300 | Paid only after 5 years of service |
| Employer health insurance | ₹8,000 to ₹25,000 | The insurer |
| Variable or performance pay | ₹60,000 to ₹1,80,000 | Only if targets are met |
| Your own PF contribution | ₹21,600 to ₹43,200 | Your EPF account |
| Professional tax | ₹2,400 | State government |
| TDS | Varies by regime and declarations | Income Tax Department |
Two of those lines are not losses at all. Both PF contributions are your money, earning around 8 percent tax-free, and gratuity becomes real once you cross five years. The genuinely misleading line is variable pay, because it is usually counted in CTC at full value and paid at whatever percentage the company achieves.
Frequently asked
What to do next
- Ask for the detailed breakup, never just the CTC figure.
- Ask what percentage of variable pay actually paid out in the last two cycles.
- Run both tax regimes before you submit your declaration.