Why You Need to Calculate In-Hand Salary
Your CTC or gross salary is not what you take home. Deductions (Employee PF, income tax (TDS), professional tax, and others) can reduce it by 25–35%. Knowing how to calculate in-hand salary helps you budget, plan EMIs, compare job offers, and avoid overcommitting. This guide walks you through the step-by-step process: gross salary components, statutory deductions, tax calculation, and the formula for net take-home. All content is focused on the calculation methodology for salaried employees in India.
Key Takeaways
- In-hand = Gross − All deductions. Gross = Basic + HRA + Allowances (excluding employer PF, gratuity from monthly)
- Employee PF: 12% of basic, capped at ₹1,800/month if basic > ₹15,000
- Income tax: Based on regime (Old/New), taxable income, and slab rates. Declare 80C, 80D, HRA for lower TDS
- Professional tax: State-specific, typically ₹200–300/month. Deducted before in-hand
- Use a calculator: Our In-Hand Salary Calculator does all steps automatically
Step 1: Determine Gross Salary
What to include and exclude
Exclude employer PF, gratuity, and other cost-to-company items that do not reach your bank. Variable pay and bonus are added in the month paid. Use your payslip 'Earnings' or 'Gross' section.
Step 2: Calculate Employee PF
Step 3: Calculate Professional Tax
- Applicable states: Maharashtra, Karnataka, West Bengal, Tamil Nadu, Gujarat, and others. Not in Delhi, UP, Rajasthan.
- Typical amount: ₹200/month (e.g. Maharashtra, Karnataka). Some states have slab structure.
- Annual cap: Often ₹2,500/year. Deducted monthly or in last month(s).
- Check your state: Professional tax rules vary. HR or payslip will show the deduction.
Step 4: Calculate Taxable Income and Income Tax
- Annualise gross: Multiply monthly gross by 12. Add annual bonus if any.
- Subtract standard deduction: ₹50,000 (Old) or ₹75,000 (New).
- Subtract 80C, 80D, HRA, etc. (Old Regime only).
- Taxable income = Gross − Deductions. Apply slab rates. Add cess 4%.
- Monthly TDS = Annual tax ÷ 12. Employer deducts this each month.
Step 5: Apply the Formula
Worked Example
📊 ₹8 LPA CTC, Basic ₹24,000, HRA ₹9,600, SA ₹18,400. Old Regime, 80C ₹1.5L, HRA exempt
Common Calculation Mistakes
- Using CTC instead of gross: CTC includes employer PF, gratuity. These are not part of your gross earnings.
- Ignoring professional tax: Small but reduces in-hand. Varies by state.
- Wrong tax regime: Old vs New gives different TDS. Ensure employer uses your choice.
- Not claiming HRA/80C: Under-declaration means higher TDS. Submit proofs in time.
- Forgetting variable pay: If bonus is paid, that month's in-hand will differ. Annualise for true picture.
Using Our In-Hand Salary Calculator
Enter basic, HRA, allowances, tax regime, 80C, 80D, HRA exemption (rent), and other deductions. The calculator applies PF, professional tax, and income tax automatically and shows your monthly in-hand. Use it before accepting offers or planning expenses.
Disclaimer
Calculation is indicative. Actual in-hand depends on employer structure, exact deductions, and TDS as computed by employer. Use for planning; verify with payslip.