On this offer, what separates the ₹46,638 gross from the ₹44,038 in-hand?

Your own PF contribution of ₹2,400 and professional tax of ₹200

The employer's PF contribution of ₹2,400

Tax deducted at source on the year's income

The ₹962 a month gratuity provision was counted inside your CTC from day one. When does it become yours?

After five completed years of service

At the end of each financial year

Immediately — it is already held in an account in your name

Lesson 1 of 2 · 8 min

What a ₹6 lakh CTC actually pays you

CTC, gross and in-hand are three different numbers, and the gap is wider than most people expect. The annexure, not the headline, tells you which is which.

CTC means cost to company — every rupee your employer expects to spend on you in a year. Not all of it reaches your bank account as cash, because some of it is money the company pays on your behalf: its own PF contribution, a gratuity provision, sometimes a one-time joining bonus.

So the amount landing in your account each month is smaller, and the front page rarely says by how much. The page that does say is the salary annexure — read that one first.

One ₹6,00,000 offer, three different numbers

Assumes a basic of ₹20,000 a month (40% of CTC) and the new tax regime. Your own split is in the annexure of your offer.
Layer	Monthly figure	What it is
CTC ÷ 12	₹50,000	The headline. Includes money you never see as monthly cash
− employer PF (12% of basic)	− ₹2,400	Real money, but it goes to your EPF account, not your bank
− gratuity provision (about 4.81% of basic)	− ₹962	Set aside for a payout that vests only after five years of service
= Gross salary	₹46,638	What the payslip starts from
− your own PF contribution	− ₹2,400	Also yours, also parked in EPF
− professional tax	− ₹200	A state levy. Varies by state; a few charge nothing
= In-hand	₹44,038	What actually arrives. TDS is nil here — tax on this income is zero after the section 87A rebate

The actual document

The salary annexure, where the ₹6 lakh is actually spent

Meridian Systems India Pvt Ltd

Annexure A to the offer letter · monthly figures

Candidate: S. Iyer
Role: Associate Engineer
Annual CTC: ₹6,00,000
Basic as % of CTC: 40%

Reaches your payslip

Basic₹20,000
House Rent Allowance₹8,000
Special allowance₹18,638
Gross salary₹46,638

Also inside the CTC — spent on you, not paid to you

Employer's PF contribution₹2,400
Gratuity provision₹962
Paid on your behalf₹3,362

Cost to company, per month₹50,000

A fictional annexure. ₹50,000 × 12 = ₹6,00,000 — the headline, reconciled.

Tap a numbered marker to see what that line means.

1
Basic. 40% of CTC. Nothing on this page is negotiated as often as the headline and as rarely as this line, even though your PF, your gratuity and your HRA ceiling are all worked out on it.
2
Special allowance. The balancing figure — whatever is left after the named components. It is the line employers stretch to hit a CTC number, and it is fully taxable in both regimes.
3
Employer's PF contribution. 12% of basic. Genuinely yours, and genuinely not spendable — it goes to your EPF and EPS accounts, not your bank. It is counted in the ₹6 lakh all the same.
4
Gratuity provision. About 4.81% of basic, set aside against a payout that vests only after five years of service. Leave in year four and you never see a rupee of it — but it was counted in your CTC every month.
5
Cost to company, per month. This is the number the offer letter leads with, and it is the one number here that never reaches you. The figure to plan rent around is the gross above it — and then only after PF, professional tax and TDS come out of that.

Work it out yourself

Put the numbers from your own offer into the CTC calculator. The size of the gap between CTC and in-hand is the first thing worth knowing about any offer.

CTC to In-Hand Salary Calculator

Myth

“A bigger CTC always means more money in your bank every month.”

False

Two offers with the same CTC can pay very different amounts in hand. A large variable bonus, a one-time joining amount, employer PF and a gratuity provision all sit inside CTC. An offer of ₹6.5 lakh loaded with variable pay can put less in your account each month than a ₹6 lakh offer paid mostly as fixed salary. Compare monthly in-hand plus what reaches your EPF — not headlines.

Six lakh on paper, forty-four in the bank

KabirTara

Kabirasking
My offer says six lakh. That is ₹50,000 a month. Everyone keeps telling me to expect about ₹44,000. Where does the rest of it go?
Taraexplaining
Mostly nowhere frightening. Two of those cuts are still your money — ₹2,400 of employer PF and ₹2,400 of your own, both sitting in EPF. The gratuity provision of ₹962 is being set aside.
Kabirasking
Set aside where? I have never seen it anywhere.
Taraexplaining
In the company's books, until you complete five years of service. Leave in year three and that provision was never yours — but it was counted inside your CTC from day one.
Kabirasking
So the headline number includes money I might never get. That feels like a trap.
Taraexplaining
It is a container, not a promise about your bank balance. That is why two offers at the same CTC pay very different amounts each month, and why the annexure tells you more than the front page.

Match them up

Five words the offer letter uses without explaining

What each term actually is on this ₹6 lakh offer.

CTC

Gross salary

In-hand

Gratuity provision

Salary annexure

Drag each meaning up or down until it sits beside the term it belongs to.

Your turn

An offer says CTC ₹6,00,000, and the annexure shows employer PF of ₹2,400 a month and a gratuity provision of ₹962 a month inside it. What is the monthly gross salary?

Quick check

Which of these is inside CTC but never arrives in your bank account as monthly cash?

Check yourself

1 / 3

Kabir asks

Your offer says ₹6,00,000 CTC. Why is ₹50,000 a month not what turns up in your account?

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