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.
| 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 |
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 CalculatorMyth
“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
Pick a term, then pick what it actually is on this ₹6 lakh offer.
Pick a term on the left.
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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