#salarytips

Here's something most employees discover way too late:

Your CTC includes two PF contributions and neither one reaches your salary account.

Let's break it down with a real example.

Your CTC: ₹10,00,000/year Basic salary: ₹4,00,000/year (40% of CTC) What's happening Amount/year Your PF contribution (12% of basic)₹48,000- deducted from your gross Employer's PF contribution (12% of basic)₹48,000- added to CTC, goes to your PF account Total PF in your CTC₹96,000

That's ₹96,000 in your ₹10L CTC that never goes into your bank account.

On top of that, gratuity provision (roughly ₹23,000/year on this salary) is also part of your CTC and you only receive it if you stay for 5 continuous years.

So your "₹10 lakh CTC" might actually mean:

₹10,00,000 CTC

minus employer PF (₹48,000)

minus gratuity provision (₹23,000)

= ~₹9,29,000 gross salary

minus your PF deduction (₹48,000)

minus income tax (varies)

minus professional tax (₹2,400)

= ₹6.8L–₹7.2L in-hand per year

That's ₹57,000–₹60,000/month in hand. Not ₹83,333.

This isn't a scam. It's just how CTC is structured and most companies don't explain it clearly at the offer stage.

You got a ₹12 lakh CTC offer. You did the math. ₹1 lakh a month, right?

Your first payslip says ₹72,000.

Nobody lied to you. But nobody explained it either. Here's what's actually happening:

1. Your employer's PF contribution is in your CTC — but never touches your bank account

Your employer contributes 12% of your basic salary to your Provident Fund. That money goes directly into your PF account, not your salary. But it's counted in your CTC. So you're "earning" it — just not spending it anytime soon.

2. Gratuity is included in your CTC even though you can only claim it after 5 years

Every month, a gratuity provision sits in your CTC. Leave before 5 years? You forfeit every rupee of it. That's typically ₹30,000–₹50,000/year in your CTC that has conditions attached — and most people don't find out until they resign at year 3.

3. Your own PF deduction (12% of basic) is taken from your gross salary

Not only is your employer's PF in your CTC — your own 12% contribution is deducted from your gross before you see anything. That's two PF hits eating into the headline number.

4. "Special allowance" is just a filler component — and it's fully taxable

When the numbers don't add up to your CTC, companies add a "special allowance" to bridge the gap. It has zero tax exemption. It exists to make the CTC number look bigger.

5. Variable pay assumes 100% performance — yours might not

If 20% of your CTC is variable, that ₹12L assumes you hit every target. Miss them? Your real CTC was always ₹9.6L.

The CTC number is a cost calculation, not a salary promise.

Before you accept your next offer, break it down component by component — basic, HRA, PF, gratuity, variable, and special allowance. Know exactly what hits your account and what doesn't.

Mastering job offer negotiation is key to unlocking your true career value. Learn how to communicate confidently, avoid leaving money on the table, and secure better pay and benefits with the right strategies. Start negotiating smarter: https://www.barrierstoemployment.com/knowing-how-to-play-ball-mastering-job-offer-negotiations/

Just got your salary? Before you spend it all, here’s how to manage it wisely! In this video, we break down the 50-30-20 budget rule - one of the simplest and most effective ways to handle your monthly income.

Whether you’re a working professional, student, or beginner in personal finance, these money management rule will help you take control of your salary and secure your financial future.

Start your journey to financial freedom today!