In-hand SalaryPF and gratuity inside your CTC
Provident fund (PF)
Under the Employees' Provident Funds Scheme, 1952, the employee pays 12% of wages into the provident fund and the employer pays the same. In an offer, the employer's 12% is counted inside the CTC, and the employee's 12% is taken from the gross salary. So a basic of ₹4,00,000 a year means ₹48,000 from the employer (in the CTC) and ₹48,000 from you (out of your pay).
The wage ceiling
The PF scheme has a wage ceiling above which contribution is not compulsory. The Press Information Bureau reports that it was raised from ₹15,000 to ₹25,000 a month from 17 September 2026 (notification S.O. 5109(E); source read on 13 November 2026, see Sources below). Many employers cut PF on the full basic anyway, and some only up to the ceiling. If PF is cut only up to ₹25,000 a month, the most that goes in a year from each side is ₹36,000. The calculator lets you pick either method.
Gratuity
The Payment of Gratuity Act, 1972 sets the amount at 15 days of wages for each completed year of service, with a month taken as 26 days, so gratuity = last drawn basic × 15 ÷ 26 × years. Employers count about basic ÷ 12 × 15 ÷ 26 a year (about 4.81% of basic) inside the CTC. It is paid when you leave after five years of service, or earlier on death or disability. If you leave before five years the provision is not paid to you, which is why it is a poor measure of the money you will actually receive soon.
Does a higher basic help or hurt?
A higher share of basic raises both PF and gratuity: less in monthly cash, more in long-term savings. If you need cash now, ask for a lower basic and more allowances; for retirement savings a higher basic is better. Check how HRA and other allowances are linked to basic as well.
Common questions
Is employer PF part of my salary?
It is part of the CTC and goes into your PF account, but you do not receive it in the monthly pay.
Is gratuity paid every month?
No. It is a lump sum after five years of service, but it is counted inside the CTC as a yearly provision.
Can I withdraw the PF?
Withdrawal rules are set by EPFO and depend on the reason and the length of membership. Check them at epfindia.gov.in.
- Tax slabs, rebate, surcharge and cess for tax year 2026-27: Memorandum explaining the provisions of the Finance Bill, 2026 (Ministry of Finance) and the Income Tax Department e-filing help page "Salaried Individuals for AY 2026-27". Checked on 11 November 2026.
- Gratuity formula (15 days of wages for each year of service, a month taken as 26 days): Payment of Gratuity Act, 1972, section 4(2). Employee and employer PF at 12% of wages: Employees' Provident Funds Scheme, 1952.
- PF wage ceiling of ₹25,000 a month from 17 September 2026 (Gazette notification S.O. 5109(E) under the Code on Social Security, 2020): Press Information Bureau releases on the EPFO wage ceiling (PRID 2313829, PRID 2314111). Read on 13 November 2026 (the Gazette text itself was not opened).
- Professional tax: a state tax; this page assumes ₹2,500 a year, and states differ, some charge less and some have none.
This is an estimate built on the assumptions listed on the page, with tax rates checked on 11 November 2026. It is general information, not tax or financial advice. Your own payslip can differ. Confirm tax questions at incometax.gov.in or with a professional.