How the numbers are calculated

Step 1 — CTC to gross

Basic salary defaults to 40% of CTC (adjustable from 30% to 60%). If employer PF is part of CTC, 12% of basic is removed; if the PF cap is on, the contribution is computed on a wage ceiling of ₹15,000 per month, so it is at most ₹1,800 a month. If gratuity is part of CTC, 4.81% of basic (15 days of pay per year of service) is removed. What is left is gross salary.

Step 2 — gross to taxable income

New regime: taxable income is gross minus the ₹75,000 standard deduction. Old regime: gross minus the ₹50,000 standard deduction, minus professional tax (deductible under section 16(iii)), minus each itemised deduction at its statutory cap: section 80C up to ₹1,50,000, NPS 80CCD(1B) up to ₹50,000, 80D up to ₹1,00,000, home loan interest 24(b) up to ₹2,00,000, plus anything you enter as other deductions. The HRA exemption under section 10(13A) is computed from the HRA component (default 40% of basic), the rent you pay and your city: the least of HRA received, rent minus 10% of basic, and 50% of basic in Delhi, Mumbai, Kolkata or Chennai (40% elsewhere). An employer NPS contribution under 80CCD(2) is removed from CTC like employer PF and deducted in both regimes, up to 14% of basic in the new regime and 10% in the old.

Variable pay stays inside gross and is taxed in full, but it is held out of the monthly figure: the monthly in hand shown is fixed pay after its share of tax, and the variable part is reported separately after tax, since it arrives quarterly or yearly and rarely at 100% of target.

Step 3 — tax on the slabs

Slab tax is applied band by band on taxable income, rounded to the rupee.

Section 87A rebate and marginal relief

New regime: if taxable income is at most ₹12,00,000, tax is reduced by up to ₹60,000, which makes it zero. Just above the cap, marginal relief limits the tax to the amount by which income exceeds ₹12,00,000, so a ₹12.10 lakh taxable income pays ₹10,000 plus cess rather than the full slab tax. Old regime: rebate of up to ₹12,500 when taxable income is at most ₹5,00,000, with no marginal relief.

Surcharge and cess

Surcharge applies to tax (after rebate) when taxable income exceeds ₹50 lakh: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, and 37% above ₹5 crore under the old regime only (the new regime caps at 25%). Marginal relief ensures total tax never rises by more than the income above each threshold. Health and education cess of 4% is added on tax plus surcharge.

Step 4 — taxable to in hand

In hand for the year is gross minus income tax (including cess), minus your own 12% EPF contribution on basic (same cap rule as the employer side), minus professional tax (default ₹2,400 a year; the constitutional maximum is ₹2,500). Divided by twelve, that is the monthly figure shown everywhere. The calculator computes both regimes on your inputs and highlights the one with lower tax.

Worked example — 12 LPA

• CTC ₹12,00,000 → basic ₹4,80,000 → employer PF ₹57,600 → gross ₹11,42,400
• New regime: taxable ₹10,67,400 → slab tax ₹46,740 → rebate ₹46,740 → tax ₹0
• Old regime with ₹1.5 lakh of deductions: taxable ₹9,40,000 → tax ₹1,04,520
• Employee PF ₹57,600, professional tax ₹2,400
• In hand: ₹10,82,400 a year, ₹90,200 a month (new regime)

What is not modelled

• Joining bonuses and clawbacks, and the timing of variable pay: the calculator spreads tax evenly and assumes variable pay is paid at 100% of target.
• LTA, 80E, 80G, 80TTA and other deductions without a field of their own. Enter the total as other deductions.
• State-specific professional tax slabs (Karnataka and Maharashtra charge about ₹200 a month, Delhi and Haryana nothing). Set the annual amount yourself.
• Income from other sources and TDS timing across the year. RSU and ESOP perquisite tax has its own calculator.
• The Labour Codes in force since 21 November 2025 require that allowances excluded from "wages" stay within 50% of total pay, so many employers now set basic at or near 50% of CTC. The default here is still 40%; move the slider to match your offer letter.
• The ₹7.5 lakh annual cap on tax-free employer contributions to EPF, NPS and superannuation combined, in force from 1 April 2026.

How it is verified

The engine is a set of pure functions over data-driven rule tables, one object per regime per financial year. Fifteen checkpoint tests pin the slab arithmetic at ₹4 lakh, ₹7 lakh, ₹12 lakh, ₹12.1 lakh (marginal relief), ₹16 lakh, ₹24 lakh and ₹50 lakh (surcharge relief), plus the CTC waterfall and regime comparison. A new financial year is added as a new rule object with its own tests; an applied year is never edited.

Sources

• Finance Act 2026 (Union Budget 2026-27, 1 February 2026): no change to slab rates, the standard deduction, the section 87A rebate, surcharge or cess for FY 2026-27.
• Income-tax Act 2025, in force from 1 April 2026: replaces the 1961 Act, uses a single "tax year" in place of previous year and assessment year, and carries the new regime in section 202 (formerly 115BAC).
• Finance Act 2025 (Union Budget 2025-26): the slab tables, ₹75,000 standard deduction, ₹60,000 rebate with marginal relief that FY 2026-27 inherits.
• Employees' Provident Funds and Miscellaneous Provisions Act 1952 and EPFO circulars: 12% contribution, ₹15,000 wage ceiling.
• Payment of Gratuity Act 1972: 15 days of basic per completed year (4.81%).
• Article 276 of the Constitution: professional tax capped at ₹2,500 a year; state acts for actual slabs.

Official references: Income Tax Dept. (tax slabs, 87A rebate, surcharge & cess) · EPFO (EPF rates & wage ceiling) · Ministry of Labour (gratuity & Labour Codes) · State PT notifications (professional tax under Article 276).

Changelog

• 3 Sep 2026 — Engine v2: itemised old-regime deductions at their caps, HRA exemption from rent and city, employer NPS under 80CCD(2) in both regimes, and variable pay held out of the monthly figure. New EPF, gratuity, HRA, RSU, retirement and FIRE calculators, an offer letter scanner, saved scenarios and PDF/CSV export.
• 3 Sep 2026 — Moved to FY 2026-27 (tax year 2026-27 under the Income-tax Act 2025). Finance Act 2026 kept every slab, the standard deduction, the section 87A rebate, surcharge and cess unchanged, so the FY 2025-26 tables carry forward as a new rule set with their own checkpoint tests.
• 2 Sep 2026 — Added fresher CTC pages (3.36, 3.6, 4.25, 5.75 LPA), shareable result links and the embeddable widget.
• 31 Aug 2026 — FY 2025-26 rule tables verified by hand against the Finance Act 2025 slabs: 12 lakh rebate, 12.1 lakh marginal relief, 16 and 24 lakh slab arithmetic, 50 lakh surcharge relief.

Found a number that looks wrong? Email hello@ctcinhand.in with the inputs; every report is checked against the Act and, if it is a bug, fixed with a new test.