The offer letter says ₹15,00,000. Your bank account says ₹1,06,000 a month — about ₹12.7 lakh a year. Where did ₹2.3 lakh go? Nowhere shady: it went exactly where the fine print said it would. Here is the complete trail.
The Three Salary Layers
- CTC (Cost to Company): everything the employer spends on you — including money you never see in cash.
- Gross salary: CTC minus employer-funded retirement items (employer EPF, gratuity provision).
- In-hand: gross minus your EPF share, professional tax, and income tax (TDS).
₹15 Lakh CTC, Line by Line (New Regime, 40% Basic)
| Component | Annual | Monthly |
|---|---|---|
| CTC | ₹15,00,000 | ₹1,25,000 |
| − Employer EPF (12% of Basic ₹6L) | ₹72,000 | ₹6,000 |
| − Gratuity provision (Basic × 15/26 ÷ 12) | ₹28,846 | ₹2,404 |
| = Gross salary | ₹13,99,154 | ₹1,16,596 |
| − Employee EPF (12% of Basic) | ₹72,000 | ₹6,000 |
| − Professional tax (Karnataka/Maharashtra) | ₹2,400 | ₹200 |
| − Income tax (new regime + cess) | ₹81,768 | ₹6,814 |
| = In-hand | ₹12,42,986 | ₹1,03,582 |
Roughly 17% of the CTC never reaches your monthly account. And that's the good scenario — the new regime with the ₹75,000 standard deduction. Model your own offer in the CTC calculator.
Where Each Rupee Actually Goes
- Employer + employee EPF (₹1.44 lakh/yr): not lost — it compounds at 8.25% in your PF account. The EPF calculator shows this becoming a crore-plus corpus over a career.
- Gratuity provision (~₹29,000/yr): yours only after 5 years of service. Leave early and it stays with the employer — see the 5-year rule explained.
- Income tax: the only line you can actually optimise — regime choice, NPS via employer (80CCD(2)), and timing. Compare regimes in the income tax calculator.
Negotiation Traps to Watch
- Variable pay inside CTC: a "₹15 lakh" package with ₹2 lakh variable is a ₹13 lakh guarantee. Ask for the fixed/variable split in writing.
- One-time joining bonus counted in CTC: inflates year-one CTC; year two quietly drops.
- High Basic vs low Basic: high Basic means more EPF and gratuity (good for corpus, less cash now) and more HRA headroom if you rent. Low Basic maximises take-home but shrinks retirement accrual.
- ESOPs at "face value" in CTC: illiquid until a liquidity event; never treat as cash salary.
Old Regime vs New Regime on the Same CTC
With ₹3.5 lakh of deductions (HRA + 80C + 80D), the old regime's tax on this profile lands within about ₹2,000 of the new regime's — effectively a tie at ₹15 lakh. Above ₹4 lakh of deductions old regime wins; below ₹3 lakh, new wins comfortably. The 4-salary regime comparison walks through profiles from ₹8 lakh to ₹40 lakh.
Rule of thumb: in-hand ≈ 80–85% of CTC ÷ 12 for packages under ₹20 lakh in the new regime. If a recruiter promises more, one of the deductions above is being ignored.