What CTC means
CTC stands for cost to company. It is the total your employer plans to spend on you in one year. It includes your salary, plus money the company pays on your behalf that never lands in your bank account each month.
Two common examples are the employer’s share of PF (Provident Fund, a retirement savings account) and a provision for gratuity (a lump sum paid when you leave after enough years of service). So CTC is a number from the company’s budget. It is not your monthly pay.
A ₹9 lakh CTC, line by line
Meera, 26, works in Delhi. Her offer letter says “CTC ₹9,00,000 per annum” (per year). We assume basic pay of ₹30,000 a month and HRA (house rent allowance) at half of basic. PF is 12% of her full basic, and the gratuity provision sits inside the CTC. There is no variable pay. Tax is worked out under the new regime for Tax Year 2026–27. Meera is made up; this is not a real offer.
| Per month | ₹ |
|---|---|
| CTC (₹9,00,000 ÷ 12) | 75,000 |
| − Employer PF (12% of basic) | 3,600 |
| − Gratuity provision | 1,442 |
| = Gross salary | 69,958 |
| − Meera’s own PF (12% of basic) | 3,600 |
| − Professional tax (none in Delhi) | 0 |
| − TDS (income tax cut from salary) | 0 |
| = Take-home | 66,358 |
Over the year, Meera takes home ₹7,96,296. That is about 88% of her CTC. The missing ₹1,03,704 is made up of two PF shares of ₹43,200 each and ₹17,304 of gratuity provision.
Why no tax? Her yearly gross is ₹8,39,496. After the ₹75,000 standard deduction (a fixed amount salaried people subtract first), her taxable income is ₹7,64,496. A resident with taxable income up to ₹12 lakh gets a rebate that cancels the tax in the new regime.
The PF money still belongs to her retirement savings. She just can’t spend it this month. Our guide CTC, gross and take-home walks through every line, including professional tax, in more detail.
Where you see CTC
You’ll find CTC on offer letters, in the salary breakup attached to an appointment letter, and on job portals. Recruiters use it because it is the biggest number. Many payslips don’t show CTC at all. They show gross earnings, deductions and net pay. Form 16 (the yearly TDS certificate from your employer) shows salary and tax, not CTC.
What CTC is not
- CTC ÷ 12 is not your monthly salary. In Meera’s case the gap is more than ₹8,600 a month.
- It may include variable pay. If ₹60,000 of Meera’s CTC were a yearly bonus, her monthly take-home would drop to ₹61,358. And a bonus may be paid only in part.
- Some companies add insurance premiums, meal cards or a joining bonus. Two offers with the same CTC can give quite different monthly pay.
- It isn’t your taxable income. Tax starts from gross salary, after the standard deduction.
What to check in an offer
- Ask HR for the fixed monthly gross and the expected take-home.
- Find out which parts are variable, and when they are paid.
- Check whether employer PF and gratuity are counted inside the CTC.
- Ask if PF is worked out on your full basic pay.
One more point. Under the new Labour Codes (in force since 21 November 2025), if allowances are more than 50% of your pay, part of them is added back to “wages” for PF and gratuity. That can move some money from take-home into PF.
To split your own offer, use the Salary calculator. Your numbers stay on your device.