The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman on Sunday, left taxpayers with mixed feelings. Many had hoped for an increase in the standard deduction or adjustments in income tax slabs, but the government kept the tax slabs, standard deduction, and other deductions unchanged. While income tax rates remain the same, the new labour codes have been notified, though they are not yet implemented.
So, what will your take-home salary be if your CTC is ₹12 lakh? Let’s break it down.
CTC Breakdown
- Basic Pay: ₹2,88,000
- Dearness Allowance (DA): ₹72,000
- Total Wages: ₹3,60,000
- Employer PF Contribution: ₹43,200
- Employer NPS Contribution: ₹50,400
- Gratuity Component: ₹17,316
- Special Allowance: ₹7,29,084
Total CTC: ₹12,00,000
Calculating Take-Home Salary
To calculate the gross taxable salary, employer PF contribution and gratuity are excluded:
- Gross Taxable Salary: ₹11,39,484
- Less: Standard Deduction of ₹75,000 → Gross Total Income: ₹10,64,484
- Less: NPS Deduction → Net Taxable Income (Take-Home Salary): ₹10,14,084
Tax on Gratuity
According to CA Suresh Surana, gratuity received during employment is taxable for both government and private-sector employees. In cases of retirement or death, gratuity is classified into three categories: government employees, employees covered under the Payment of Gratuity Act, 1972, and employees not covered under this Act. The tax treatment varies across these categories.
Thus, for a CTC of ₹12 lakh, the estimated take-home salary after deductions will be approximately ₹10.14 lakh per annum, with gratuity and other benefits included.
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