While most of us are confused between the CTC and in hand salary, both are different concepts. Cost to Company, in short CTC, is the total amount that a company invests in an employee throughout the year. However, in hand salary is the total amount that an employee takes home after deduction, taxation, allowances, PF, and more.
As per the 2025 Union Budget, individuals earning 12 Lakh will not have to pay income tax. So if your CTC is 12 LPA, you won’t have to pay ‘income tax,’ however, if you are getting 12 LPA in hand salary, which means your CTC exceeds 12 LPA and you have to pay income tax.
In this blog, we will cover 12 LPA in hand salary breakdowns, along with 12 LPA CTC breakdowns, and how to calculate tax on 12 LPA salary under the new tax regime. But first, let’s understand how a salary is broken down or calculated.
What is a Salary Calculator?
A salary calculator is a tool for calculating an individual’s take-home salary. It assists in calculating take-home annual salary, monthly salary, total annual deductions, and total monthly deductions, among other things. While joining a job, an employee is given a CTC form, where his bonuses, monthly professional taxes, monthly employee Provident Fund (PF), and other monthly deductions are mentioned to obtain the net figures.
A take-home salary calculator/ in hand calculator is an automated tool that helps you total your net salary after taxation and considers all bonuses and deductions applicable. You must provide the gross salary and total bonus for accurate calculation. It then determines the CTC and shows the amounts of basic salary, HRA, other allowances and deductions, PF and professional tax, total deduction, net income, income tax, and net salary after income tax deduction.
How to Use a Salary Calculator?
To use a salary calculator to figure out your take-home salary, follow these quick and simple steps:
- Choose whether you want to calculate your monthly or yearly salary.
- Enter the gross salary and total bonuses to find out the Cost-to-Company (CTC).
- Enter your basic salary percentage of the CTC.
The calculator may proceed with your basic salary as 50% of the CTC by default, you may change it as per your need.
Once you input the required details, the calculator will quickly provide the following information.
- Basic Salary
- HRA
- Other Allowances
- Provident Fund
- Professional Tax
- Total Deductions
- Net Salary
- Income Tax
- Net Salary Post Tax
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Salary Calculation Formula
As the salary calculations involve various components, you need to use different formulas to figure out each aspect. After figuring out each aspect, you can estimate your take-home salary. These are some important salary calculation formulas to calculate salary:
- Take-Home Salary = Gross Salary – (Income Tax + Employee Provident Fund (EPF) + Professional Tax (if applicable))
- Gross Salary = Basic Salary + Allowances + Bonuses + Overtime Pay (if applicable)
Gratuity = (Basic Salary + Dearness Allowance) × 15 × (Years of Service) ÷ 26 - Taxable Income = Gross Salary – EPF/PPF Contribution – Tax-Free Allowances – HRA – LTA – Health Insurance Premiums – Tax-Saving Investments (e.g., 80C, 80D) – Other Deductions (e.g., Standard Deduction, Home Loan Interest)
1) Estimated Salary Structure for ₹12 LPA Fixed in Hand Salary
| Component | Monthly (₹) | Annually (₹) |
| Earnings | ||
| Basic Wage | 45,000 | 5,40,000 |
| House Rent Allowance (HRA) | 18,000 | 2,16,000 |
| Conveyance/Transport Allowance | 1,600 | 19,200 |
| Medical Expenses | 1,250 | 15,000 |
| Other/Special Allowances | 30,150 | 3,61,800 |
| Deductions | ||
| EPF Contribution by Employee (12%) | 5,400 | 64,800 |
| EPF Contribution by Employer (12%) | 5,400 | 64,800 |
| Health Insurance | 1,000 | 12,000 |
| Professional Tax | 200 | 2,400 |
| Net Salary (Total earnings – Deductions) | ₹88,400 | ₹10,60,800 |
2) Estimated Salary Structure for ₹12 LPA CTC Salary
| Component | Monthly (₹) | Annually (₹) |
| Earnings | ||
| Basic Wage | 45,000 | 5,40,000 |
| House Rent Allowance (HRA) | 18,000 | 2,16,000 |
| Conveyance/Transport Allowance | 1,600 | 19,200 |
| Medical Expenses | 1,250 | 15,000 |
| Other/Special Allowances | 49,150 | 5,89,800 |
| Deductions | ||
| EPF Contribution by Employee (12%) | 5,400 | 64,800 |
| Health Insurance | 1,000 | 12,000 |
| Professional Tax | 200 | 2,400 |
| Net Salary (Total earnings – Deductions) | ₹1,00,400 | ₹12,04,800 |
3) Estimated Salary Structure for 12 LPA in Hand Salary Per Month
| Component | Monthly (₹) | Annually (₹) |
| Earnings | ||
| Basic Wage | 45,000 | 5,40,000 |
| House Rent Allowance (HRA) | 18,000 | 2,16,000 |
| Conveyance/Transport Allowance | 1,600 | 19,200 |
| Medical Expenses | 1,250 | 15,000 |
| Other/Special Allowances | 49,150 | 5,89,800 |
| Total Gross Salary | 1,15,000 | 13,80,000 |
| Deductions | ||
| EPF Contribution by Employee (12%) | 5,400 | 64,800 |
| Health Insurance | 1,000 | 12,000 |
| Professional Tax | 200 | 2,400 |
| Income Tax (Approx.) | 12,000 – 15,000 | 1,44,000 – 1,80,000 |
| Total Deductions | 18,600 – 21,600 | 2,23,200 – 2,59,200 |
| Net In-Hand Salary (After Deductions & Tax) | ₹78,000 – ₹81,400 | ₹9,36,000 – ₹9,76,800 |
Components on Gross Salary of 12 LPA in Hand Salary
1. Basic salary
The basic salary is part of the CTC (Cost-to-Company) that employers pay to employees for their services. It is usually around 40% to 50% of the total salary. However, basic salary can not be calculated, as it depends on various factors, such as industry, employee designation, and more.
2. House Rent Allowance (HRA)
House Rent Allowance (HRA) is an allowance paid by the company to assist employees who stay in a rented property. It comprises 50% of the basic salary if you live in a metro city, and 40% when you reside in a non-metro city. Under Section 10(13A) of the Income Tax Act,1961, HRA is partially or completely tax exemptible, however, in case you live in your own house and don’t pay rent, HRA is taxable.
3. Leave Travel Allowance (LTA)
Leave Travel Allowance is given to the employee by employers to help you and your family take benefits of domestic travel expenses during a vacation. The allowance only covers railway tickets or airfare.
Section 10(5) of the Income Tax Act, 1961, offers tax exemption on the LTA amount for up to two holidays in a four-calendar-year block, for which you need to submit proofs of travel to receive the tax benefit.
4. Special Allowance
Employees are given a special allowance in addition to their basic salary based on multiple factors. This allowance differs from one company to another, as it is determined by various factors, and it is subject to taxation.
5. Bonus
Bonuses are another component of gross salary that employees may be paid as performance incentives. They differ from company to company and are completely taxable.
6. Employee Provident Fund (EPF)
Almost every company has a mandatory saving scheme of Provident Fund. In the Employee Provident Fund, employees must pay 12% of their basic salary as an EPF contribution. Moreover, the employer matches the employee’s contribution and invests the same amount in the EPF account. Under Section 80C of the Income Tax Act, 1961, an employee’s contribution is tax-deductible up to Rs 1.5 lakhs.
The employer’s contribution to the EPF is included in the CTC but is not listed on the salary slip.
12 LPA in Hand Salary New Tax Regime- Tax Liabilities
| Particulars | Old Tax Regime (₹) | New Tax Regime (₹) |
| Gross Salary u/s 17(1) | 12,00,000 | 12,00,000 |
| Less: Exemptions u/s 10 | ||
| Reimbursement | NA | Nil |
| Children’s Education & Hostel Allowance | NA | Nil |
| Less: Deduction u/s 16 | ||
| Standard Deduction | 50,000 | 75,000 |
| Deduction of Professional Tax Paid | 2,400 | Nil |
| Income under the Head “Salary” | 11,47,600 | 11,25,000 |
| Less: Deductions under Chapter VI-A | ||
| Section 80C (Investments like PPF, LIC) | 1,50,000 | Nil |
| Section 80D (Health Insurance) | 50,000 | Nil |
| Section 80E (Education Loan Interest) | 25,000 | Nil |
| Net Total Taxable Income | 8,22,600 | 11,25,000 |
| Income Tax Calculation | ||
| Income Tax (Including Surcharge & Cess) | ₹80,120 | ₹72,800 |
| Less: Rebate u/s 87A | 0 | 0 |
| Final Tax Liability (Including Cess) | ₹80,120 | ₹72,800 |
Conclusion
Conclusion about Calculate 12 LPA in Hand Salary, Calculating 12 LPA in hand salary, along with CTC, is quite simple. Numerous salary calculator tools help calculate and break down the salary components, helping you identify the various allowances, deductions, and taxes on the salary. Knowing your in-hand salary is important for planning a realistic budget that shows your actual disposable income, preventing you from overspending and managing your expenses. It also assists in negotiating a job offer, managing investments, and financial planning.
Various platforms allow individuals to calculate their in hand salary, CTC, and taxable liabilities. By entering your salary details, one can easily figure out the allowances and deductions, tax rebates, and more.
FAQs About LPA in Hand Salary
1) How much income tax do I have to pay on a 12 LPA salary?
According to the New Tax Regime announced by Finance Minister Nirmala Sitharaman in the Union Budget FY 2025-26 (AY 2026-27), individuals earning a salary up to 12 LPA are not required to pay any income tax.
2) Is 12 lakhs salary zero tax?
According to the rebate announced by Finance Minister Nirmala Sitharaman in the 2025 Union Budget, those earning up to Rs 12 LPA will have zero tax liability. However, the tax liability increases to Rs 61,500 if the taxable income exceeds Rs 12 LPA.
3) What is the basic salary formula?
To calculate Basic salary, use this formula:
Basic Salary = Gross Pay – Total Allowances (HRA, LTA, medical insurance, dearness allowance, etc.)
4) What are the main components of salary structure?
The main components of a salary structure are basic salary, HRA, DA, conveyance, medical allowance, special allowance, provident fund, professional tax, and bonuses.