CTC Calculation Formula in India

Understanding how CTC is calculated helps you compare job offers correctly. This page explains the exact CTC calculation formula used in India with clear breakup and examples, and how it affects your take-home salary.

What is CTC?

CTC (Cost to Company) is the total annual expense an employer incurs for an employee. It includes fixed salary, statutory contributions, and benefits. If you are new to this concept, read our detailed guide on what is CTC.

Step 1: Fixed Salary Components

Basic Salary
House Rent Allowance (HRA)
Special Allowance
Other Allowances

Gross Salary = Basic + HRA + Special Allowance + Other Allowances

Learn more in our salary breakup guide.

Step 2: Employer Provident Fund (PF)

Employer PF is a statutory contribution included in CTC, but it is not paid monthly.

Employer PF = 12% × Basic Salary

Some companies cap PF at ₹15,000 basic salary. Learn more in our PF calculation guide.

Step 3: Gratuity Calculation

Gratuity = (Basic Salary × 15 × Years of Service) / 26

Annual Gratuity = (15 / 26) × Basic Salary

Complete CTC Calculation Formula

CTC = Gross Salary + Employer PF + Gratuity + Bonuses & Benefits

CTC Formula Summary:

CTC = Gross Salary + Employer PF + Gratuity
Gross Salary = Basic + HRA + Allowances
Take-Home = Gross Salary − PF − Professional Tax − Income Tax

Why CTC Is Not Your Take-Home Salary

Your take-home salary is the amount credited to your bank account after deductions. You can instantly estimate this using our CTC to in-hand salary calculator.

CTC Calculation Formula – FAQs

What is CTC in salary in India?

CTC (Cost to Company) is the total annual cost an employer incurs for an employee. It includes fixed salary, employer provident fund (PF), gratuity, bonuses, and other benefits.

Is employer PF included in take-home salary?

No. Employer provident fund (PF) is included in CTC but is not paid as part of your monthly take-home salary.

How is gratuity calculated in CTC in India?

Gratuity is calculated as (Basic Salary × 15) / 26 for each completed year of service. Although payable only after 5 years, employers usually include gratuity as a notional component in CTC.

Why is take-home salary less than CTC in India?

Take-home salary is lower than CTC because deductions such as employee PF, professional tax, and income tax are subtracted from the gross salary.

Want to calculate your exact in-hand salary?

Calculate Your Take-Home Salary