❓ Frequently Asked Questions – Salary Calculator India
What is CTC and how is it different from in-hand salary?
CTC (Cost to Company) is the total annual expense a company incurs for an employee, including basic salary, HRA, allowances, EPF employer contribution, gratuity and other benefits. In-hand (take-home) salary is the actual amount credited to your bank account each month after all deductions like employee EPF, professional tax and income tax TDS are subtracted. In-hand salary is typically 60-75% of annual CTC depending on your tax bracket and deductions.
What is the difference between New and Old Tax Regime?
The New Tax Regime (default from FY 2023-24) offers lower tax rates with fewer exemptions. It provides a standard deduction of ₹75,000 but does not allow most other deductions like HRA exemption, 80C, 80D etc. The Old Tax Regime has higher tax rates but allows all exemptions and deductions. New regime is generally better for those with fewer investments or lower CTC. Old regime benefits those with high HRA, 80C investments and home loans.
How is HRA exemption calculated?
HRA exemption under the old tax regime is the minimum of three values: (1) Actual HRA received from employer, (2) 50% of basic salary for metro cities or 40% for non-metro cities, (3) Actual rent paid minus 10% of basic salary. The minimum of these three is exempt from tax. If you don't pay rent or live in your own house, HRA is fully taxable. HRA exemption is only available in the Old Tax Regime.
How is EPF (Employee Provident Fund) calculated?
Employee contributes 12% of basic salary to EPF. Employer also contributes 12% of basic salary — of which 8.33% goes to EPS (Employee Pension Scheme, capped at ₹15,000 basic) and 3.67% goes to EPF. The employer's contribution is included in CTC but does not come to you directly — it accumulates in your PF account. The employee's 12% is deducted from your salary each month.
What is Gratuity and is it part of CTC?
Gratuity is a benefit paid by the employer as a token of appreciation for long service. It is calculated as 4.81% of basic salary and is typically included in CTC by employers. However, you only receive gratuity after completing 5 years of continuous service with the same employer. Since it's part of CTC but not received monthly, it reduces your effective monthly take-home. This calculator accounts for gratuity as a CTC component that is not part of monthly cash flow.