Your CTC is fixed. Your take-home isn't.

Why your CTC is not your salary

Aditi and Rohan joined the same analytics firm in Bengaluru in the same week, on the same ₹24,00,000 package, reporting to the same manager. A year on, Aditi is ₹2,34,087 better off. Neither was promoted. Neither negotiated a raise. Neither broke a rule. Rohan simply ticked the old regime on his declaration form without checking, and on a salary with no rent receipts and no home loan, that one tick cost him ₹19,507 a month. Aditi read her offer letter as a menu; Rohan read it as a receipt.

Your CTC is a number your employer has already agreed to spend on you. It is fixed. What is not fixed is the shape it takes on the way to your account — how much becomes basic pay, how much becomes allowance, how much gets diverted into retirement before it is taxed, and how much is simply handed over as fully taxable cash because nobody bothered to ask for anything else.

Every rupee of that package ends up in exactly one of four places: your bank account, a voucher you can only spend on specific things, a retirement instrument you cannot touch for decades, or the government's coffers. The optimiser above exists to show you that split as a single moving bar, and to let you drag rupees from the fourth bucket into the first three.

How this calculator works — methodology

The tool computes salary under the Income-tax Act, 2025 and the Income-tax Rules, 2026, both in force from 1 April 2026. It runs two parallel calculations — new regime and old — and shows both simultaneously so you can compare rather than guess.

Key assumptions the calculator makes explicit: basic salary defaults to 50% of CTC where you do not override it; gratuity is provisioned at 4.81% of basic; employer PF is capped at 12% of the ₹15,000 statutory wage ceiling (₹21,600 a year) unless you choose uncapped; employer NPS is modelled at 14% of basic in the new regime and 10% in the old. Employee PF and home-loan principal are automatically counted inside the ₹1,50,000 Section 80C ceiling in the old regime — they consume it rather than sitting on top of it, which is the mistake most calculators make.

Structuring gains are measured strictly within a single regime, on spendable money (bank credit plus vouchers, because vouchers move money out of the account without losing value). Amounts routed into NPS, PF and gratuity are reported as locked savings, never as gains.

Old vs New Regime — the summary

The new regime offers a ₹75,000 standard deduction and lower slab rates across the board, but strips nearly every exemption. The old regime keeps the full deduction menu — HRA, 80C, home loan interest, health insurance, LTA — at the cost of higher slab rates and paperwork.

Which wins depends entirely on how much you can legitimately claim. A salaried person with no HRA, no home loan and no dependants is almost always better off in the new regime. A person in the 30% bracket with a large home loan loss, genuine HRA and children in school will often find the old regime worth the friction. The tool computes both and shows you the gap — and the complete regime analysis with four worked examples at ₹8L, ₹15L, ₹24L and ₹50L goes much deeper if you are on the fence.

HRA — the 50%/40% rule and the 8 cities

HRA exemption is the lesser of three amounts: HRA actually received, rent paid minus 10% of basic salary, or a city-rate percentage of basic. From 1 April 2026, eight cities qualify for the 50% rate under Rule 279 of the Income-tax Rules, 2026: Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Every other location stays at 40%.

Two things the tool accounts for that most calculators do not: HRA received defaults to the city rate applied to basic (the common structural estimate), and you can override it with your actual payslip figure. And from the 2026 Rules, the rented accommodation must be at your place of employment — which matters if you maintain a home in a different city from where you work. For the full three-formula walkthrough, documentation checklist and HRA calculator, see the HRA exemption guide.

PF and gratuity — what gets locked, what is deductible

Employee PF is 12% of basic, capped at 12% of ₹15,000 (₹21,600 a year) unless your employer chooses to contribute on full basic. That money leaves your salary every month but stays yours — it lands in your EPFO account rather than vanishing. In the new regime, employee PF is not deductible. In the old regime it counts toward the ₹1.5 lakh Section 80C ceiling — which your PF alone may already fill if your basic is high enough.

Gratuity accrues at 4.81% of basic annually. You see it only after five years of continuous service. It is real money in a locked box, and the tool shows it as locked savings rather than hiding it inside your take-home figure.

Employer NPS — 14% vs 10%, and the lock-in reality

Employer NPS contributions are deductible in full under Section 80CCD(2) in both regimes, subject to an aggregate employer contribution cap of ₹7.5 lakh (PF plus NPS plus superannuation). The ceiling differs by regime: 14% of basic in the new regime, 10% in the old. The extra 4% is one of the most concrete advantages of the new regime for salaried employees who have not yet set up employer NPS.

The trade-off the tool makes visible: routing basic into NPS reduces your bank credit. It is a transfer to retirement savings, not a gain. Whether that transfer is worth it depends on your age, liquidity needs and whether you expect to actually draw down NPS in retirement. The NPS guide covers the 80CCD(2) vs 80CCD(1B) distinction, annuity taxation and age suitability in full.

A worked example — ₹24L CTC in Bengaluru

CTC ₹24,00,000. Basic 50% (₹12,00,000). Bengaluru. Age under 60. Professional tax ₹200/month. PF on the statutory ceiling.

Step 1 — what never reaches gross salary: Employer PF ₹21,600 (12% of the ₹15,000 monthly ceiling × 12). Gratuity ₹57,720 (4.81% of basic). Neither is cash you can spend, so both come off the top. Gross cash salary = ₹24,00,000 − ₹21,600 − ₹57,720 = ₹23,20,680. (Turning on employer NPS at 14% of basic would divert a further ₹1,68,000 — the walkthrough above shows that variant.)

Step 2 — taxable income and tax (new regime): ₹23,20,680 − ₹75,000 standard deduction = ₹22,45,680 taxable. Slab tax under the 2025 Act: ₹0 on the first ₹4L; 5% on ₹4L (₹20,000); 10% on ₹4L (₹40,000); 15% on ₹4L (₹60,000); 20% on ₹4L (₹80,000); 25% on the remaining ₹2,45,680 (₹61,420). Total before cess: ₹2,61,420. Add 4% cess (₹10,457): ₹2,71,877.

Step 3 — bank credit: Gross cash minus employee PF minus professional tax minus income tax: ₹23,20,680 − ₹21,600 − ₹2,400 − ₹2,71,877 = ₹20,24,803 a year, or ₹1,68,734 a month.

Step 4 — the same salary in the old regime: Employee PF of ₹21,600 already sits inside the ₹1.5L Section 80C ceiling, so with no other claims the taxable figure is ₹23,20,680 − ₹50,000 − ₹2,400 − ₹21,600 = ₹22,46,680. Tax: ₹12,500 + ₹1,00,000 + 30% of ₹12,46,680 (₹3,74,004) = ₹4,86,504, plus cess = ₹5,05,964. Bank credit: ₹1,49,226 a month. On these bare numbers the new regime is ahead by ₹19,507 a month — ₹2,34,087 over the year.

Where the old regime competes: That ₹2,34,087 gap is the hurdle old-regime deductions have to clear. Working backwards from the slab arithmetic, this salary needs roughly ₹7,50,000 of additional deductions — HRA, the ₹2L self-occupied interest, the balance of 80C, 80D, children's allowances — before the old regime merely draws level. That is a high bar, and it is the single most useful number on this page: it tells you whether the paperwork is worth attempting at all.

The actionable levers — and their real trade-offs

Employer NPS (both regimes): Saves the most tax for people in the 20–30% bracket. The cost is liquidity — you cannot touch the corpus until 60, and 40% must be annuitized at retirement. Best suited to people in stable employment with no near-term cash need.

Meal vouchers (both regimes): ₹200 per meal × 2 meals × 22 working days × 12 months = ₹1,05,600 of exempt pay, worth roughly ₹31,000 of tax at 30%. Costs the employer nothing; requires a named line in the salary structure. Easiest lever to turn on.

HRA (old regime only): Can be large — a person paying ₹35,000/month rent in Bengaluru on a ₹24L CTC exempts ₹3,00,000 (₹4,20,000 rent minus 10% of ₹12,00,000 basic — the binding formula). But it requires genuine rent payments, a genuine HRA component in CTC, and from 2026, rent must be at your place of employment. Calculate your HRA exemption →

Home loan interest (old regime for self-occupied, both regimes for let-out): The most misunderstood lever in the country. A self-occupied home gives up to ₹2L of interest deductible — old regime only, and it has not risen since 2014. A let-out property gives uncapped interest deductible in both regimes, but with a crucial difference in loss set-off. Full home loan tax guide →

Edge cases the tool handles — that most calculators miss

Renting out your flat can increase your tax. If rent exceeds interest, the house property head produces positive income taxable in both regimes. The tool shows the house property line as a plus or a minus depending on your numbers — not a uniform deduction.

The ₹7.5L aggregate cap. If your employer's combined contributions to PF, NPS and superannuation exceed ₹7,50,000, the excess is a taxable perquisite added back to your gross salary. The walk-through shows this explicitly in the ₹7.5L perquisite row.

PF already filling 80C. If your basic is high enough that employee PF alone reaches ₹1,50,000, further 80C investment (ELSS, PPF, insurance) adds nothing in the old regime. The tool says so explicitly rather than letting you chase a deduction you have already used up.

Professional tax is deductible in the old regime only, under Section 16(iii) of the 2025 Act, capped at ₹2,500/year. Small in isolation — worth roughly ₹750 at the 30% slab — but it matters when the two regimes are close.