CTC Salary Structure: PF, ESIC and Take-Home Pay

CTC and take-home pay

Cost to Company (CTC) is an employer’s annual cost figure. It may include cash salary, employer statutory contributions, insurance and variable pay. Take-home pay starts with the cash wages due for the pay period and is reduced by applicable employee contributions, tax withholding and other authorised deductions. The offer letter defines which items are included in the quoted CTC.

Compare the written salary breakup rather than applying a single take-home percentage. Check whether each amount is monthly or annual, fixed or variable, paid in cash or deposited as a benefit, and whether the employer contribution is included in CTC. Our CTC to In-Hand Salary Calculator provides an estimate using the assumptions entered.

Common salary components

• Basic salary and allowances: Contractual cash components. There is no universal rule that basic salary must be a fixed percentage of CTC. The wage definition for each law determines which components count for a contribution or benefit. Under the Code on Social Security, specified exclusions can be added back where they exceed the statutory proportion; this is a wage calculation rule, not a direction to set basic pay at 50% of CTC.
• HRA and reimbursements: These may appear in the offer, but their tax treatment depends on the tax year, regime, payment type and required evidence. See the HRA calculator and confirm the tax rules for the period concerned.
• EPF and EPS: Employer and employee contributions depend on establishment and member coverage, contribution wages, scheme rules and the wage ceiling in force for the relevant month. Do not assume that every employee has the same contribution base or EPS allocation. Use the EPF calculator as an estimate.
• ESI: Where the establishment and employee are covered, contributions use ESI wages under the applicable law, not an automatic “gross salary” figure. The current coverage ceiling and rates must be checked against the relevant notification and contribution period.
• Gratuity and bonus: These depend on statutory coverage, wage definition, eligibility and service. Gratuity has exceptions to the ordinary five-year condition. They are not necessarily monthly cash payments.
• Kerala Professional Tax: The published salary slabs are assessed half-yearly by the responsible local body. Employers may spread deductions across payroll, but confirm the local body’s process and schedule. See our Kerala Professional Tax guide.

Estimate take-home in a consistent order

1. Separate fixed cash salary from employer-paid benefits and variable pay.
2. Identify the correct contribution wage and eligibility for each statutory item; do not use one common base for PF, ESI, gratuity and bonus.
3. Calculate employee-side statutory contributions and local deductions for the payroll period.
4. Estimate income-tax withholding using the tax year and regime that apply. Income through 31 March 2026 remains under the Income-tax Act, 1961; income from 1 April 2026 is under the Income-tax Act, 2025.
5. Compare the estimate with the offer letter and payroll statement. The calculator does not decide statutory coverage or tax eligibility.

For a salary review, share the written breakup and applicable payroll period with a qualified payroll or tax professional. GHR Consultancy provides payroll services for Kerala businesses.