A couple of years ago I got an offer that said 18 LPA and I did the lazy math in my head: eighteen divided by twelve, so about ₹1.5L landing in my account every month. Nice.
The first payslip said something closer to ₹1.1L.
Nobody had lied to me. That's just what happens between the number on the offer letter and the number your bank actually shows you. I've watched friends make the same face I did, so this is my attempt to explain where the money goes — and why "CTC" is one of the more misleading acronyms in Indian tech.
CTC is a budget, not a salary
CTC stands for Cost to Company. The clue is in the name: it's what you cost your employer, not what you take home. Stuffed inside that one big number are a few things you'll never see as monthly cash.
The employer's PF contribution — 12% of your basic — is part of your CTC but goes straight into your EPF account. Gratuity (roughly 4.81% of basic) is accrued for the day you leave, and you only actually get it after five years. And then there's variable pay: that shiny "included" bonus that's often paid once a year, and rarely at 100%.
Pull those out and you're left with your real gross cash. Already we're well below eighteen-over-twelve.
Then the monthly deductions start
From that gross, more comes out before it reaches you. Your own share of EPF (another 12% of basic). Professional tax, a small state levy — usually a couple hundred rupees a month. And the big one: income tax, deducted every month as TDS.
That income tax number is where most of the confusion — and most of the "wait, which regime?" arguments — actually lives.
New vs old regime, without the lecture
For FY 2025-26 the new regime is the default, and honestly it got hard to argue against for most salaried people. The standard deduction is ₹75,000 (the old regime gives ₹50,000), and thanks to the Section 87A rebate you effectively pay no tax up to ₹12L of taxable income. The catch is that the new regime throws out most of the exemptions people used to love — HRA, 80C, and friends.
So the honest answer to "which one?" is: it depends on how much you were claiming.
If you're someone with a big rent, a home loan, and a maxed-out 80C, the old regime can still come out ahead. If you're like most people I know — not itemising much — the new regime usually wins now, and it isn't close. The only way to actually know is to compute both and compare, which no one wants to do by hand at 11pm while staring at an offer.
So what does 18 LPA really pay?
Take that 18 LPA with a fairly normal structure — 45% basic, 10% variable. Strip the employer PF and gratuity, deduct your EPF, professional tax, and new-regime tax, and the monthly take-home lands somewhere in the ₹1.1–1.2L range depending on the exact split. Not the ₹1.5L my brain promised.
And here's the part worth remembering when the number stings: you're also quietly stacking well over a lakh a year into EPF. It's not in your monthly in-hand, but it's still your money — just wearing a different hat.
I got tired of doing this by hand
After running this arithmetic for my own offers and then for half my group chat, I built a small thing that does it for you: an in-hand salary calculator for India. You put in a CTC, it shows the monthly take-home with both regimes side by side, splits RSUs out from cash, and doesn't ask you to sign up for anything — it all runs in the browser.
There are ready-made breakdowns for the usual suspects too, like 12 LPA and 25 LPA, if you just want a ballpark before a call.
If you try it and the math looks off for your situation, tell me — I'd rather hear it and fix it than have one more salary tool on the internet that's confidently wrong.
