CTC, gross and in-hand are different
Cost to company (CTC) is everything the employer spends on an employee in a year: monthly gross salary, variable pay, and the employer's own contributions such as PF, ESI and the gratuity provision. Gross salary is what appears on the payslip before deductions. In-hand pay is gross less the employee's PF, ESI, professional tax and TDS. Offers are usually made in CTC, which is why a clear structure avoids disappointment when the first salary arrives.
How the builder works
Basic + DA is set as a percentage of CTC (50% by default). HRA is a percentage of Basic – 50% in a metro and 40% elsewhere is the common policy. Employer PF is 12% of PF wages (restricted to ₹15,000 if you choose) plus EDLI and admin charges; gratuity is provided at 4.81% of Basic (15/26 ÷ 12). If monthly gross works out to ₹21,000 or less, employer ESI at 3.25% is included too. Whatever is left after these is the special allowance, so the structure always adds up to the CTC.
The 50% wage rule
The labour codes, in force from 21 November 2025, define wages as Basic + DA (and retaining allowance) and add back allowances that exceed 50% of total pay. Structures with a low Basic and large allowances therefore don't reduce PF, gratuity or bonus as they once did. The builder checks that Basic + DA is at least 50% of gross pay and shows the actual percentage, so you can design structures that are compliant from the start.
Estimating take-home pay
The in-hand estimate deducts employee PF, ESI where applicable, professional tax and an estimate of TDS. The TDS estimate uses the tax year 2026-27 slabs: under the new regime there is no tax on income up to ₹12 lakh after the ₹75,000 standard deduction, with marginal relief just above. For the exact tax, including HRA exemption and deductions in the old regime, use the Salary TDS Calculator template.
For HRA, the Income-tax Rules, 2026 treat eight cities as metros for the 50% limit: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad.
Free vs Pro
The free edition builds one structure at a time. The Pro edition builds structures for up to 200 employees in one sheet – useful for annual increments – and creates a printable compensation annexure for any employee to attach to the offer or revision letter.
Written by Prakash Bagchi, finance professional and founder of PB Lab. Last reviewed .