Why your in-hand pay rises by less than your hike
A hike is quoted on CTC, but three things take a share of every extra rupee before it reaches your account:
- PF: if your PF is a percentage of basic pay, both your and your employer’s contributions grow with your salary. If it is capped at the ₹25,000 wage ceiling and you are already above it, PF stops growing and more of the hike reaches you.
- Income tax: the extra income is taxed at your highest slab rate, which can be 20%, 25% or 30% under the new regime.
- The tax-free threshold: moving from just under ₹12.75 lakh (where the new regime’s rebate makes tax nil) to just above it means paying tax for the first time, so the first part of that raise is taxed heavily.
The calculator assumes the employer’s PF is part of CTC and gratuity is not, and that your basic pay stays the same share of CTC after the hike. It uses the 2026-27 tax slabs and shows the monthly in-hand pay before and after.
Negotiating a new offer? A switch usually comes with a bigger jump than an annual appraisal. See our guide on CTC vs in-hand salary before you compare offers, and use the notice period calculator to plan your joining date.
Sources
- Income Tax Department: tax rates for individuals
- PIB (Ministry of Labour & Employment): EPF wage ceiling raised to ₹25,000
Figures last checked against these sources on 4 November 2026. This tool gives an estimate for planning, not tax, legal or financial advice.