What it means
CTC is the figure on an offer letter. It is not what reaches the bank. From CTC you take out the employer’s own contributions to reach gross salary, then the employee’s deductions to reach in-hand pay. Since the Labour Codes took effect on 21 Nov 2025, “wages” (basic, DA and retaining allowance) generally need to be at least half of total pay, which affects PF and gratuity.
Example
Ravi Kumar’s monthly CTC at Kaveri Agencies is ₹50,000:
| Part | Monthly |
|---|---|
| Basic + DA | ₹25,000 |
| HRA | ₹10,000 |
| Special allowance | ₹10,798 |
| Gross salary | ₹45,798 |
| Employer PF (12% of ₹25,000) | ₹3,000 |
| Gratuity provision (4.81% of basic) | ₹1,202 |
| CTC | ₹50,000 |
| Less: employee PF (12% of ₹25,000) | ₹3,000 |
| Less: professional tax (₹200 in Karnataka; varies by state) | ₹200 |
| In-hand before income tax | ₹42,598 |
His basic + DA of ₹25,000 is within the EPF wage ceiling of ₹25,000 from 17 Sep 2026, so PF is on the full amount. Under the earlier ₹15,000 ceiling it could be ₹1,800 each.
Income tax (TDS) then comes off depending on his regime and declarations.
Common mistakes
- Telling a candidate the CTC is the monthly take-home.
- Keeping basic low to cut PF, which now runs into the “wages at least 50%” test.
- Forgetting employer ESI (3.25%) for staff whose gross is up to ₹21,000.
- Leaving offer letters with PF at ₹1,800 after the ceiling rose to ₹25,000 on 17 Sep 2026.
In MyRecords
Salary structures hold the earnings, deductions and employer contributions, and the pay run works out PF, ESI, professional tax and TDS. Each payslip shows the CTC break-up, and a “50% wages” note appears on any salary slip where basic and DA are below half of total pay. It is advice only; you and your CA decide.