Salary Structure in India: Components, Tax Treatment, Take-Home (2026)
Salary structure in India — CTC, basic, HRA, special allowance, PF, gratuity, tax. From basic to take-home, with examples.
Understanding salary structure in India is important for both employees (to know your take-home) and employers (to design a tax-efficient salary). In this guide, we break down every component of the Indian salary structure.
What is CTC (Cost to Company)?
CTC is the total cost of employing a person — including all salary components + employer PF + gratuity + insurance + bonus. It is the gross figure shown in the offer letter. The actual take-home is CTC - deductions.
Components of Salary
| Component | Description | Tax Treatment | Typical % of CTC |
|---|---|---|---|
| Basic | Core salary, basis for PF + gratuity + HRA | Fully taxable | 30-50% of CTC |
| HRA (House Rent Allowance) | Rent allowance | Exempt to minimum of 3 (old regime only) | 20-50% of basic |
| Special Allowance | Balancing figure to make up CTC | Fully taxable | Rest of CTC |
| Conveyance / Transport Allowance | Travel between home + office | ₹19,200/year exempt (old regime only) | ₹1,600-₹3,200/month |
| Medical Allowance | Medical expenses | ₹15,000/year exempt (old regime only) | ₹1,250/month |
| LTA (Leave Travel Allowance) | Travel within India during leave | Exempt if spent on travel (2 trips in 4 years) | Varies |
| Telephone / Internet Allowance | Phone + internet bills | Fully taxable | Varies |
| Books / Periodicals Allowance | Books for work | Fully taxable | Varies |
| Education Allowance | Children's education | ₹100/month per child (max 2) exempt | ₹200/month |
| Hostel Allowance | Children's hostel expenses | ₹300/month per child (max 2) exempt | ₹600/month |
| Food Coupons / Sodexo | Meal vouchers | ₹50/meal exempt (max 2 meals/day) | ₹2,600/month |
| Fuel + Car Allowance | Fuel + driver for car | Fully taxable (some exemptions) | Varies |
Employer Contributions
| Component | Description | Tax Treatment | Typical |
|---|---|---|---|
| PF (Employer) | 12% of basic + DA (max ₹1,800 basic for PF) | Tax-free (subject to limits) | 12% of basic |
| Gratuity | 5% of basic (provisioned) | Tax-free up to ₹20L | 15 days of basic per year |
| Medical Insurance (Group) | Employer-paid health insurance | Tax-free (subject to limits) | Varies |
| Term Insurance (Group) | Employer-paid life insurance | Tax-free up to ₹1.5L premium | Varies |
| ESIC (Employer) | 3.25% of gross (if eligible) | Tax-free | 3.25% of gross |
Example: ₹10 LPA Salary
Sample salary structure for ₹10,00,000 CTC per year (₹83,333/month):
| Component | Per Month | Per Year |
|---|---|---|
| Basic (40% of CTC) | ₹33,333 | ₹4,00,000 |
| HRA (50% of basic, metro) | ₹16,667 | ₹2,00,000 |
| Special Allowance | ₹20,833 | ₹2,50,000 |
| Conveyance | ₹1,600 | ₹19,200 |
| Medical | ₹1,250 | ₹15,000 |
| LTA | ₹2,500 | ₹30,000 |
| Food coupons | ₹2,600 | ₹31,200 |
| Telephone + Internet | ₹2,000 | ₹24,000 |
| Total Gross | ₹80,783 | ₹9,69,400 |
| PF (Employer) | ₹4,000 | ₹48,000 |
| Gratuity (provisioned) | ₹1,602 | ₹19,231 |
| Total CTC | ₹86,385 | ₹10,36,631 |
| Employee PF deduction | ₹4,000 | ₹48,000 |
| Professional Tax | ₹200 | ₹2,500 |
| Net Take-Home (approx., old regime) | ₹60,000-₹70,000 | ₹7,20,000-₹8,40,000 |
Tax-Efficient Salary Design
- Increase 80C components: PPF, ELSS, LIC, EPF, home loan principal
- Maximize HRA: stay in rented accommodation + provide rent receipts
- Use LTA: 2 trips in 4 years within India
- Use food coupons, telephone bills, internet bills (subject to exemption limits)
- Use NPS: additional ₹50K deduction under 80CCD(1B)
- Use employer-provided car + fuel for business (tax-free if used for office)
- Health insurance for self + parents: 80D deduction
- Education loan interest: 80E deduction (no limit, 8 years)
Take-Home Calculation
Take-Home = Gross Salary - Employee PF - Professional Tax - Income Tax. Income tax depends on the regime (old vs new) and total income.
How to Choose: Old vs New Regime
| Parameter | Old Regime | New Regime |
|---|---|---|
| Tax rates | Higher (5%, 20%, 30%) | Lower (5%, 10%, 15%, 20%, 30%) |
| Standard deduction | ₹50,000 | ₹75,000 |
| HRA, LTA, 80C, 80D, 80CCD | Allowed | Not allowed |
| Best for | High deductions, HRA, home loan | No deductions, lower tax |
| Default for FY 2024-25 | No (employee can choose) | Yes (if employee doesn't choose) |
Frequently Asked Questions
Q: What is the take-home for ₹10 LPA?
A: Approx. ₹60,000-₹70,000/month after employee PF, PT, and income tax. Depends on the regime and deductions.
Q: Is employer PF included in CTC?
A: Yes. Employer's PF contribution is part of CTC but not part of take-home.
Q: Is gratuity part of CTC?
A: Yes. Gratuity is provisioned in the CTC (typically 5% of basic).
Q: What is the difference between gross and CTC?
A: Gross: total salary before deductions. CTC: gross + employer PF + gratuity + insurance + bonus. Take-home: gross - employee PF - PT - IT.