Understanding the In-Hand Salary from an 8.7 LPA CTC
When considering a job offer that comes with an annual salary deemed as Cost to Company (CTC), it is essential to understand the in-hand salary. This includes knowing the basic salary, allowances, and deductions.
What is CTC?
Cost to Company (CTC) is the total compensation that a company offers to its employees, inclusive of all expenses, taxes, and benefits. It is often expressed in terms of a yearly figure in lakhs, specifically 8.7 LPA in this case.
Breakdown of 8.7 LPA CTC
Let's break down the 8.7 LPA CTC into its various components to find the in-hand salary:
Basic Salary: Typically, 40-50% of the CTCAllowances: This can include House Rent Allowance (HRA), conveyance, medical, etc.Deductions: Common deductions include Provident Fund (PF), Professional Tax (PT), and Income Tax (IT)Example Calculation
Let's assume the following typical breakdown:
CTC: 8.7 LPABasic Salary: 40% of CTC 3.48 LPAHRA: 20% of CTC 1.74 LPAOther Allowances: 30% of CTC 2.61 LPAEmployer PF Contribution: 12% of Basic 0.42 LPADeductions (Employee PF Contribution): 12% of Basic 0.42 LPAProfessional Tax: Varies by state but lets assume around 2500 annually.Income Tax: Will depend on your taxable income and applicable tax slabs.
In-Hand Salary Calculation
Total Earnings: Basic HRA Other Allowances 3.48 LPA 1.74 LPA 2.61 LPA 7.83 LPA
Total Deductions: Employee PF Professional Tax Income Tax assumed for this example 0.42 LPA 2500 0.525 LPA
In-Hand Salary: Total Earnings - Total Deductions 7.83 LPA - 0.525 LPA 7.305 LPA
Based on this structure, your approximate in-hand salary would be 7.3 LPA. However, this can vary based on specific components of your salary structure and tax liabilities. For a more accurate calculation, refer to your salary slip or consult your HR department.
It all depends on whether you have variables in the form of quarterly, bi-annual, or annual bonuses. In the old income tax regime, you may get around Rs 52000 to Rs 53000 per month. You will be getting a bigger amount on the months where the variables are paid out.
7.5 LPA translates to roughly 61k monthly gross salary. After deductions of PF, medical, and IT, you will receive somewhere in between 56k — 58k, depending vastly on your Income Tax, how your employer shows the basic salary, and the perks.