Moment guide · FY 2026-27

I am evaluating my first salary offer

What is the difference between CTC and take-home salary?

CTC is the total cost to the employer — basic, allowances, employer EPF, gratuity and insurance — while take-home is what lands in your bank after TDS and your own EPF share. The regime choice matters more than the headline number: the new regime with its ₹75,000 standard deduction is the default, but the old regime can win if HRA and 80C deductions are large. Submit the regime declaration and Form 12B/12BB to the employer early so TDS follows your choice.

The #1 trap

Comparing CTC with take-home straight away: CTC includes employer EPF, gratuity and other notional costs you never see in hand, so the gap is not all 'deductions'. Second, employers default TDS to the new regime — if the old regime wins for you, you must declare it or pay avoidable TDS all year.

Arjun, campus hire evaluating his first offer letter

Arjun receives an offer of ₹8,00,000 CTC. The breakup shows basic at 40% of CTC, which is ₹3,20,000, HRA of ₹1,60,000 in a metro city, special allowance of ₹2,05,000, employer EPF of 12% of basic at ₹38,400, and gratuity at 4.81% of basic at roughly ₹15,400. His take-home is not ₹8,00,000 minus TDS alone: his own 12% EPF of ₹38,400 never reaches his bank, and the employer EPF and gratuity are notional costs that never appear in his salary account either. In the old regime, his HRA exemption is the least of rent minus 10% of basic, 50% of basic in a metro, or the HRA actually received. If he pays ₹1,30,000 in rent, rent minus 10% of basic is ₹1,30,000 minus ₹32,000, which is ₹98,000, and 50% of basic is ₹1,60,000, so the exemption is the least of ₹98,000 and ₹1,60,000, which is ₹98,000. Adding the ₹1,50,000 80C ceiling for ELSS or PPF and the ₹50,000 old-regime standard deduction, his taxable income falls meaningfully. In the new regime he gets only the ₹75,000 standard deduction but the 87A rebate can make tax nil up to ₹12,00,000 total income, so on this offer the new regime likely wins even without deductions. Arjun submits the regime declaration on day one so payroll deducts TDS correctly; a late declaration means he pays extra TDS all year and reclaims it only at filing. His gratuity becomes exempt up to ₹20 lakh under section 10(10AA) once he completes five years of service, and LTA covers two economy-class India journeys per four-year block with proof of travel. A quick call with us dials in the final figure. Arjun also notices that his CTC lists a ₹12,000 medical insurance premium and a ₹6,000 term-life premium paid by the employer; the group mediclaim is fully exempt, and the term-life premium is exempt up to ₹50,000 a year, so neither appears as a perquisite. His professional tax of ₹2,400 is deducted by the employer and claimed separately under section 16(iii) in both regimes. When the first Form 16 arrives, he verifies Part A month-wise TDS against Part B and his payslips, because a mismatch in the first year of employment is a common source of notices. A quick call with us dials in the final figure.