There were times when people landed in a job and spent there lifetime in the same job and retired. But, times have changed and we tend to switch jobs more often than our elder generation.

And every time we are switching we are faced with a question *“What is your expected CTC?”*

If not all, most of us will be confused in translating CTC to Take Home.

For brevity, I am clarifying what I have considered as CTC and Take Home for the rest of this blog

**CTC – Cost To Company** – that includes PF, EPF, Your Income Tax, Professional Tax and all other allowances provided to you by the company.

**Take Home** – What we get in our Bank Account at the end of every month after deducting your income tax, PF, EPF.

I personally prefer calculating my *“fixed”* CTC based on my expected Take Home so that I can arrive at a number to answer the above question according to my planned monthly budget.

*Not just me, if one goes to bank to apply for a loan, the loan eligibility would be decided based on the amount which you are capable to pay as EMI which would in turn be dependent on your Take Home.*

But how to do that?

The easiest way is reverse calculation.

Take Home salary would be the CTC reduced by tax liability, the difference divided by 12.

The Take Home ‘H’ would be equal to the difference of CTC ‘C’ and Tax Liability ‘T’ divided by 12.

H = (C – T)/12

Now *Reverse Calculation:*

Consider Take Home, multiply it by 12 add your Tax Liability, this would be the CTC

C = 12H + T

(PF, EPF are ignored (except for Case 1) as they would offset both – tax liability and Take Home. That is, if PF and EPF are considered, they would be deducted from your take home, consequently your tax liability would be reduced based on PF/EPF contribution thereby increasing the Take Home. Hence, for simplicity PF/EPF are ignored, however the end result would be approximately equal if they are considered too)

Getting back to calculation part:

Now there are multiple Tax slabs and based on the tax slabs for **Financial Year 2017-18** below is a simple calculation of CTC ‘C’ for a considered Take Home ‘H’

Case 1:

For annual income less than 2.5 Lakhs

H < 20833 then;

C = (12 * H) + (PF/EPF contribution)

assuming PF/EPF contribution to be approximately 0.5% of CTC

C = (12 * H)/0.995

Case 2:

For annual income between 2.5 Lakhs to 5 Lakhs

20833 < H < 41666 then;

C = ( (12 * H) – 12500)/0.95

Case 3:

For annual income between 5 Lakhs to 10 Lakhs

41666 < H < 83333 then;

C = ( (12 * H) – 87500)/0.8

Case 4:

For annual income higher than 10 Lakhs

H < 83333 then;

C = ( (12 * H) – 175000)/0.7