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 | Fully taxable since FY 2018-19 (replaced by the standard deduction); ₹3,200/month exempt only for specified disabled employees | ₹1,600-₹3,200/month |
| Medical Allowance | Medical expenses | Fully taxable since FY 2018-19 (the ₹15,000 reimbursement exemption was replaced by the standard deduction) | ₹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, old regime only (limit under the 1962 Rules; check the Income-tax Rules, 2026 for tax year 2026-27) | ₹200/month |
| Hostel Allowance | Children's hostel expenses | ₹300/month per child (max 2) exempt, old regime only (limit under the 1962 Rules; check the 2026 Rules) | ₹600/month |
| Food Coupons / Meal Vouchers | Meal vouchers | Exempt up to the per-meal limit in the Income-tax Rules (₹50 a meal under the 1962 Rules) | ₹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 (often capped at 12% of the ₹15,000 wage ceiling = ₹1,800/month) | Tax-free, except employer PF + NPS + superannuation above ₹7.5 lakh a year | 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 group life cover | Generally not taxed as a perquisite | 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 | ₹17,781 | ₹2,13,369 |
| 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 | ₹77,731 | ₹9,32,769 |
| PF (Employer) | ₹4,000 | ₹48,000 |
| Gratuity (provisioned) | ₹1,602 | ₹19,231 |
| Total CTC | ₹83,333 | ₹10,00,000 |
| Employee PF deduction | ₹4,000 | ₹48,000 |
| Professional Tax | ₹200 | ₹2,500 |
| Net Take-Home (approx., new regime: no tax after the rebate) | ₹73,531 | ₹8,82,269 |
| Net Take-Home (approx., old regime, depending on rent and deductions) | ₹68,000-₹71,000 | ₹8,16,000-₹8,52,000 |
Labour Codes check: since the Code on Wages and Code on Social Security came into force on 21 November 2025, "wages" for PF, gratuity and bonus are computed so that excluded allowances such as HRA and conveyance cannot exceed 50% of total remuneration; any excess is added back to wages. The Code does not require basic pay itself to be 50% of CTC. In this example basic is about 43% of gross, so PF and gratuity would be worked out on a higher wage figure. Many employers now set basic + DA at 50% of pay.
Tax-Efficient Salary Design
- Old regime only: use 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) (old regime); employer NPS contribution up to 14% of basic + DA under 80CCD(2) is deductible in the new regime too
- 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. Section numbers here (80C, 80D, 80CCD) are those of the Income-tax Act, 1961, which governs FY 2025-26; from tax year 2026-27 the Income-tax Act, 2025 carries the same deductions under new section numbers.
How to Choose: Old vs New Regime
| Parameter | Old Regime | New Regime |
|---|---|---|
| Tax rates | Higher (5%, 20%, 30%) | Lower (5%, 10%, 15%, 20%, 25%, 30%); nil tax up to ₹12 lakh after rebate |
| Standard deduction | ₹50,000 | ₹75,000 |
| HRA, LTA, 80C, 80D, 80CCD(1B) | Allowed | Not allowed (employer NPS under 80CCD(2) is allowed) |
| Best for | High deductions, HRA, home loan | No deductions, lower tax |
| Default regime (FY 2023-24 onwards) | No (employee can choose) | Yes (if employee doesn't choose) |
Frequently Asked Questions
Q: What is the take-home for ₹10 LPA?
A: On the sample structure above, about ₹73,500 a month under the new regime (no income tax, because taxable salary stays under ₹12 lakh after the ₹75,000 standard deduction) and about ₹68,000-₹71,000 under the old regime, after employee PF and PT. It depends on the structure, rent 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.
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