Every deduction explained ā HRA, PF, TDS, Professional Tax, ESIC. CTC to take-home in plain language. Updated for FY 2025-26.
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CTC (Cost to Company) is the total annual expenditure your employer incurs on you. Your in-hand salary is lower because several components are deducted before you receive your pay.
š” A ā¹12L CTC typically results in ā¹72,000ā85,000 in-hand per month, depending on your rent, city, and tax choices.
TDS (Tax Deducted at Source) is the advance income tax your employer deducts every month. It's not extra tax ā it's your annual income tax paid in 12 installments. If too much is deducted, you get a refund when you file ITR.
Professional Tax is a state-level tax deducted by employers in states like Maharashtra (max ā¹200/mo), Karnataka (ā¹200/mo), West Bengal, and Andhra Pradesh. The maximum across India is ā¹2,500/year. It's deductible from your taxable income.
Download your full salary breakdown as a PDF ā useful for loan applications and HR discussions.
Unlock for ā¹299/yr| Rule | Amount | Note |
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HRA exemption is governed by Section 10(13A) of the Income Tax Act. The exempt amount is the lowest of three values.
ā ļø If your monthly rent is less than 10% of your basic salary, your HRA exemption is ā¹0. Always check this before planning your rent.
If your annual HRA claim exceeds ā¹1 lakh, you must submit your landlord's PAN. Always keep rent receipts. If paying to a family member, you must show actual bank transfers ā cash payments are not accepted by the IT department.
When your employer deducts 12% of your Basic for PF, it's matched by an equal employer contribution. However, the employer's 12% is split: 8.33% goes to EPS (Employees' Pension Scheme, max ā¹1,250/mo) and 3.67% goes to EPF.
The EPF interest rate for FY 2023-24 is 8.25% per annum ā one of the highest guaranteed returns in India, and completely tax-free.
From FY 2023-24, the New Regime is the default. You must explicitly opt into the Old Regime when filing your ITR if you want to claim deductions.
š” Rebate u/s 87A: If taxable income ā¤ ā¹12L in New Regime, your tax is ā¹0 (rebate of up to ā¹60,000). Salaried with standard deduction of ā¹75,000 pay zero tax up to ā¹12.75L CTC. Old Regime: ā¹0 tax up to ā¹5L (rebate ā¹12,500).