What is the Salary Calculator?
The gap between an offered salary and the amount that reaches your account surprises most people at least once. Cost to company includes employer contributions and benefits that are never paid to you as cash, while deductions for tax and retirement contributions reduce what is actually transferred.
This calculator estimates take-home pay from a gross figure, which is the number that actually matters when you are budgeting or comparing two offers.
What each input means
- Annual CTC
- The cost-to-company figure in your offer letter: everything the employer spends on you, including benefits that never reach your account as cash.
- Basic salary
- Basic pay as a share of CTC. Provident fund and gratuity are worked out on basic, so a higher share means more retirement saving and a little less cash each month.
- Does the CTC include employer PF and gratuity?
- Most offers count the employer's PF contribution and gratuity inside CTC, so they are taken out before your gross salary is worked out. Choose No if your offer lists them on top.
- Professional tax per year
- The state levy deducted from salary. It varies by state, and some states do not charge it.
- Tax regime
- The new regime has lower rates and a larger standard deduction; the old regime allows deductions such as 80C. The calculator applies the FY 2026-27 slabs, the rebate and 4% cess.
- Old-regime deductions
- Tax-saving investments and expenses you claim under the old regime. They are ignored under the new regime.
How this calculation works
Deductions are subtracted from gross pay to arrive at net pay. The components typically include income tax withheld at source, mandatory retirement contributions, professional taxes where applicable, and any voluntary deductions you have elected.
Cost to company complicates the comparison further, because it includes the employer's share of contributions and the notional value of benefits. Those are real value but they are not cash, so CTC always exceeds gross pay, which in turn exceeds take-home.
Formula: Take-home = CTC − employer PF and gratuity − your PF − professional tax − income tax
Getting the most out of the result
- Compare offers on take-home pay, not on cost to company. The headline figures can be misleading.
- Ask for a detailed salary structure. The split between basic pay and allowances affects retirement contributions and several tax calculations.
- Remember that your own retirement contribution is deducted but not lost — it is saving, not expense.
- Account for the fact that variable pay and bonuses are not guaranteed when budgeting monthly.
- Check which benefits carry real value to you. Insurance you would otherwise buy is worth more than a perk you will never use.
Common mistakes to avoid
Candidates habitually compare offers on cost to company, which can favour an offer with a larger employer contribution and lower actual cash. Treating gross pay divided by twelve as monthly income is another routine error, since it ignores every deduction. People also budget around variable pay as though it were fixed, and overlook that a lower basic salary reduces retirement contributions even when total pay looks similar — a difference that compounds over a career.
Frequently asked questions
What is the difference between CTC, gross and net pay?
Cost to company is everything the employer spends on you including their contributions and benefits. Gross pay is what is credited to you before deductions. Net or take-home pay is what actually reaches your account. Each is smaller than the last.
Why is my take-home lower than I expected?
Typically because tax is withheld at source, retirement contributions are deducted, and the offer was quoted as cost to company rather than gross pay. Request a full breakdown showing each deduction.
Is my retirement contribution really a deduction?
It reduces take-home pay but it is your money being saved, not spent. When comparing offers, treat it separately from tax, which does not come back to you.
How does the basic pay proportion matter?
Retirement contributions, house rent allowance calculations and gratuity are commonly derived from basic pay. Two packages with identical totals but different basic proportions produce different outcomes on all three.
Should I count variable pay in my budget?
Budget on fixed pay and treat variable components as a bonus. Variable pay depends on performance and company results, and planning fixed commitments around it is risky.
Does this include employer contributions?
No. It estimates what reaches you after deductions. Employer contributions are part of your total compensation but are not paid to you as cash.
How do I compare two offers properly?
Compare monthly take-home first, then add the value of benefits you would otherwise pay for, then consider retirement contributions as savings. Comparing headline CTC figures alone tells you very little.
Guides that go deeper
- Old vs New Tax Regime: A Worked Walkthrough
- How HRA Exemption Is Worked Out
- From CTC to Take-Home: How a Salary Offer Turns Into Cash