CTC vs Net Salary — Where the Difference Goes
Confused why your CTC doesn't match your bank credit? Upload your salary slip to see exactly where the difference goes.
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CTC vs Net Salary — Where the Difference Goes
Cost to Company (CTC) is the total amount your employer spends on you annually, including components that never appear in your bank account. When your offer letter states a CTC of ₹12 LPA, your monthly in-hand salary will typically be significantly lower — and understanding why requires breaking down the payslip.
The gap between CTC and net salary is made up of: your own EPF contribution (12% of basic), your employer's EPF contribution (which is a cost to them but not income to you), professional tax, TDS deducted at source, and sometimes health insurance premiums or gratuity accruals. Variable pay components like performance bonuses are included in CTC but are not guaranteed monthly payments.
A typical breakdown for a ₹12 LPA CTC might show ₹1,00,000/month gross, with ₹12,000 in EPF (employee), ₹8,500 in TDS, ₹200 in professional tax — leaving approximately ₹79,000–₹82,000 as net in-hand pay. The exact figure depends on your declared deductions and tax regime.
Frequently Asked Questions
Why is my in-hand salary lower than my offer letter CTC?
CTC includes all employer costs including your PF contribution, employer's PF contribution, taxes, and sometimes gratuity provisions — components that don't appear as cash in your bank account.
What's usually deducted between CTC and net salary?
Common deductions include PF (employee share), professional tax, TDS, and sometimes group insurance premiums. The employer's PF contribution is also part of CTC but is not paid to you directly.
Is variable pay included in CTC?
Yes, variable or performance pay is typically included in the stated CTC. However, it is usually paid quarterly or annually based on performance targets, not as part of your monthly in-hand salary.