The Indian salary structure is deliberately complex: CTC, gross salary, basic pay, HRA, LTA, PF, and gratuity all interact in ways that make it hard to understand what you will actually receive. This guide gives you a clear framework for understanding, calculating, and comparing salary structures at Indian tech companies.
- Real cash components (received in bank): Basic Salary (30-50% of CTC), HRA (40-50% of basic), Special Allowance (gap filler), Medical Allowance (Rs 15,000/year, taxable), LTA (Rs 30,000-60,000/year, tax exempt against travel bills), Food coupons (Rs 2,200/month, partially exempt), Telephone reimbursement (partially exempt).
- Non-cash or deferred components. Employer PF contribution (12% of basic: goes to EPF account, not your bank), Gratuity provision (4.81% of basic: paid only after 5 years of service), Group health insurance premium (company cost, not your cash), ESOPs (entirely separate).
- Monthly take-home formula. monthly gross salary minus employee PF (12% of basic) minus income tax TDS minus professional tax.
- HRA exemption equals the minimum of. actual HRA received, rent paid minus 10% of basic salary, OR 50% of basic (metro cities: Mumbai, Delhi, Kolkata, Chennai) or 40% for non-metro.
- To claim. pay actual rent, get rent receipts. If annual rent exceeds Rs 1 lakh, provide landlord PAN.
- Old tax regime vs new. HRA exemption is only available under the old regime.
- New regime. lower rates but no exemptions. If your total deductions (HRA + 80C + home loan + NPS + medical insurance) exceed Rs 3.75 lakh, old regime is typically better.
- CTC headline is the worst comparison metric.
- Framework. Step 1: calculate monthly take-home for each offer (break down salary, subtract PF, subtract estimated TDS). Step 2: value non-cash benefits (health insurance sum insured and family coverage, meal allowances, ESOP value discounted for illiquidity). Step 3: consider growth trajectory (typical annual increment, promotion velocity). Step 4: factor in cost of living.
- Most common mistake. accepting a higher CTC offer with significantly higher variable component without verifying the actual variable payout history at that company.
Increment cycleApril 1 is the most common effective date (Indian financial year). October 1 is the second most common. Average increment across Indian IT in 2026: 7-10% of fixed salary. High performers at product companies: 15-20%. Promotion increment: 15-30% above the regular increment, plus revised variable component and often a new ESOP grant. Lateral switch premium: switching typically yields 30-50% increase: why switching every 18-24 months is a common strategy for rapid compensation growth in early careers. After reaching Rs 25-30 LPA, the switching premium narrows and role quality, team, and growth should weigh more heavily.