How CTC becomes take-home pay
Cost to company includes everything the employer spends: gross salary plus the employer's PF contribution, employer ESI where applicable, and often a gratuity provision. Gross salary is what appears as earnings on the payslip. Take-home is gross minus employee PF, employee ESI, professional tax and tax deducted at source. The calculator first removes employer contributions from CTC to arrive at gross, then splits gross into basic, HRA and special allowance, then applies deductions.
Basic is set to 50% of gross by default, which satisfies the Code on Wages rule that basic, DA and retaining allowance must be at least half of total remuneration. HRA is set as a percentage of basic. Whatever is left becomes special allowance. Employer PF is 12% of basic capped at the ₹25,000 ceiling unless you choose full-wage contribution.
- Gross = CTC − employer PF − employer ESI − gratuity provision (if included)
- Basic ≥ 50% of gross keeps the structure Code-on-Wages compliant
- Employee PF 12% of basic (capped at ₹25,000 unless full-wage)
- ESI applies only if gross ≤ ₹21,000 per month
- Professional tax uses the selected state slab
How TDS is estimated
The estimate uses the new tax regime for FY 2026-27, which Budget 2026 left unchanged: nil up to ₹4 lakh, 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above, with a ₹75,000 standard deduction and the Section 87A rebate that makes taxable income up to ₹12 lakh tax-free. Health and education cess of 4% is added. Employee PF and professional tax are not deductible in the new regime, so they do not reduce the tax figure. The old regime, with HRA exemption and Section 80C deductions, is not modelled; employees who opt for it should use their employer's declaration form.