Nobody lied to you. The offer letter and the bank credit are just answers to two different questions.
Short answer: your CTC is what you cost the company; your credit is what survives four subtractions: the employer's own PF contribution (it was inside the CTC), a gratuity provision you can only claim after 5 years, variable pay held for later, and then your deductions — your PF (mandatory portion now explicitly ₹1,800 a month under the EPF Scheme 2026), professional tax, and TDS if you earn enough to owe any. Our salary pages compute the exact number for every CTC.
New tax regime, FY 2026-27 · EPF Scheme 2026 in force from 29 June 2026 · Figures indicative, as of August 2026
| Line | What it is | Reaches your bank? |
|---|---|---|
| Basic salary | The anchor — typically 40–50% of CTC; PF and gratuity are computed on it | Yes |
| HRA | House rent allowance — a tax lever only under the old regime | Yes |
| Special allowance | The balancing figure that makes the structure add up | Yes |
| Variable pay / bonus | Paid quarterly or annually, at a performance percentage — not monthly | Later, partially |
| Employer PF | The company's 12% — inside your CTC, outside your bank, inside your EPF account | No (but it is yours) |
| Gratuity provision | ~4.8% of basic, provisioned now, payable only after 5 years of service | No, for years |
| Your PF deduction | Mandatory ₹1,800/month (12% of the ₹15,000 statutory ceiling); anything above is voluntary | No (goes to your EPF) |
| Professional tax | A state levy, typically ₹200/month in most levying states | No |
| TDS | Income tax deducted monthly against your annual liability | No |
From 29 June 2026, the Employees' Provident Funds Scheme, 2026 replaced the 1952 scheme and made one thing explicit: the mandatory contribution — yours and your employer's — is 12% of wages up to the ₹15,000 statutory ceiling, i.e. ₹1,800 each per month, no matter how large your basic is. Contributions above that are voluntary, for both sides. Many employers still compute PF on full basic; under the new scheme that is a policy choice, not a legal obligation — which makes "do you contribute PF on full basic or on the ceiling?" a question worth asking HR in week one, because the answer changes both your take-home and your retirement compounding. Our EPF guide works through both configurations.
Under the new regime a salaried person owes no tax up to ₹12.75 lakh of gross salary (₹12 lakh taxable after the ₹75,000 standard deduction, wiped by the Section 156(2)(a) rebate). Most first salaries sit under that line, so a correctly configured payroll deducts zero TDS. If TDS is appearing anyway, the usual culprits are a missing PAN (attracting higher deduction), an old-regime default you didn't choose, or joining mid-year with a previous-employer income declaration pending. The fix is paperwork, not resignation — and any excess comes back as a refund at filing. The regime guide covers the declaration cycle.
The only number worth memorising from all this: in-hand as a percentage of CTC, which typically runs 80–88% at entry salaries and falls as you climb (our per-CTC pages compute it exactly, including the band where a raise can shrink). Compare job offers on that number and the fixed component behind it — never on the CTC headline, which is precisely the number built to be compared. The offer-letter guide catalogues the standard inflation tricks.
Because CTC includes money that never routes through your bank: the employer's PF contribution, a gratuity provision payable only after 5 years, and variable pay released separately. Your own PF, professional tax and any TDS then come off what remains.
The mandatory deduction is ₹1,800 a month — 12% of the ₹15,000 statutory ceiling — under the EPF Scheme 2026 in force since June 2026. Anything above that is a voluntary arrangement between you and your employer.
If your annual salary is under ₹12.75 lakh and you're on the default new regime, your tax is genuinely zero — the standard deduction plus the Section 156(2)(a) rebate cover it — so there is nothing for payroll to deduct.
A small state-government levy on employment — commonly around ₹200 a month in states that charge it, capped at ₹2,500 a year. It is unrelated to income tax and varies by state.
Related: In-hand by CTC · EPF in your first job · Reading a job offer
A note on section numbers. The Income-tax Act, 2025 replaced the Income-tax Act, 1961 with effect from 1 April 2026. Section numbers on this page are those of the 2025 Act. Where you know a provision by its old number, the mapping is: 115BAC → 202, 87A → 156, 16(ia) → 19, 80CCD(2) → 124, 112A → 198, 10(10) → 19(1) Table Sl. Nos. 3-6.
The official pages this page is checked against. If one of them disagrees with us, it wins.
Written and checked by the PaisaSamajh editorial desk · Last reviewed: 24 August 2026 · How we check this →