CTC, explained: the number in the offer letter vs the number in your bank

Cost to company is what you cost them. In-hand is what you get. Here's the gap.

Checked 20 October 2026 against the official sources below.

CTC means cost to company: everything the employer spends on you in a year. It is not your salary in hand.

What's usually inside a CTC

• Fixed pay: basic, allowances, house rent allowance.
• Employer contributions: provident fund, gratuity, sometimes insurance. These are real money, but not monthly money.
• Variable pay: paid only if the conditions are met. See variable pay.
• One-offs: joining bonus, retention bonus, sometimes counted, sometimes not.

What comes out before it reaches you

Your own provident fund contribution, professional tax and income tax.

The one number to ask for

"What will my monthly in-hand salary be in the first year, before any variable pay?" Ask for it in writing. It's the only number your rent cares about.

Why it matters more now

Under the new Wage Code, the components counted as "wages" must make up at least half of your pay, which changes how provident fund and gratuity are calculated for many packages. If your structure changed recently, that's probably why.

This is general information about how workplaces and the rules usually work, not legal advice about your contract. For your own situation, read your appointment letter and policies, and talk to your state labour department, a union or an employment lawyer.

More guides

• The bell curve: why your rating was decided before your reviewForced distribution, explained by someone who has sat on the wrong side of it.
• Variable pay: the part of your salary that varies, mostly towards zeroHow the 'variable' in your CTC works, and the questions to ask before you count on it.