Offer Letter Salary Decoder
Break a CTC into cash, retirement savings and paper value — component by component.
Offer letters list ten or twelve components with no indication of which ones become money in your account. This decoder sorts every line into four buckets — cash, conditional pay, retirement savings and non-cash value — and shows what share of the package each represents.
Components from your salary annexure
Result
Fill in the fields above and your result will appear here.
What the Offer Letter Salary Decoder does
Indian salary structures are built for tax efficiency and for making the CTC number look large. Basic salary drives PF, gratuity and your HRA exemption ceiling. HRA is cash but only partly tax-free. Special allowance is the flexible remainder. Employer PF, gratuity provision and insurance premiums are costs to the company that never appear in your bank account.
Sorting them makes two things visible: how much of the offer is real monthly money, and how much is structure. That is the comparison that matters when two offers quote similar CTCs.
How to use this tool
- Open the salary annexure attached to your offer letter — it is usually a table on the second or third page.
- Copy each annual figure into the matching field. If a component is listed monthly, multiply by twelve first.
- Put anything you cannot classify into "Other allowances" if it is paid as cash, or "Other non-cash" if it is not.
- Check that the total matches the CTC on your offer letter. If it does not, a component is missing from your annexure — ask HR for the full breakup.
- Read the share column: cash components should typically be 70–80% of a healthy package.
Formula and method
Cash components = Basic + HRA + Special + LTA + Other allowances
Conditional = Variable + Joining bonus + Retention bonus
Retirement = Employer PF + Gratuity provision + Employer NPS
Non-cash = Insurance premiums + Other non-cash items
Total CTC = Cash + Conditional + Retirement + Non-cash
Recurring package = Total CTC − One-time bonuses
Worked example
Example: a ₹12,00,000 offer decoded
| Cash components (basic, HRA, special, LTA) | ₹10,40,000 — 87% |
| Variable pay | ₹1,20,000 — 10% |
| Employer PF + gratuity provision | ₹44,688 — 4% |
| Insurance | ₹15,000 — 1% |
Monthly cash before tax is about ₹86,667. After income tax, your own PF and professional tax, the credit is roughly ₹78,000 — which is what the CTC to in-hand calculator works out in detail.
What your result means
Cash share above 80% is a straightforward, cash-heavy package. Below 70% means a large part of the headline number is structure rather than salary.
Basic below 30% of fixed pay is a warning sign. It shrinks your PF, your gratuity entitlement and the maximum HRA exemption you can claim, all to make the take-home look larger today.
The recurring package is the number to compare against another offer. One-time bonuses are worth having, but they do not repeat and they do not compound into future increments.
Important considerations
- Ask for the salary annexure before accepting. An offer that states only a CTC figure cannot be evaluated properly.
- A flexible benefit plan lets you allocate part of the special allowance between LTA, fuel, meal cards and similar heads. Under the new tax regime most of those exemptions no longer apply, so the flexibility is worth less than it once was.
- Insurance shown inside CTC is genuine value if the cover is good, particularly if it includes parents — but it is not money, and you lose it the day you leave.
- Employer NPS under Section 80CCD(2) remains deductible under both tax regimes, which makes it one of the more efficient non-cash components.
- If two offers have the same CTC but different basic percentages, the higher-basic one usually pays less monthly and accumulates more.
Limitations of this tool
- It classifies what you enter and does not verify it against tax rules. HRA exemption, LTA exemption and perquisite valuation all need separate calculation.
- ESOPs, RSUs and other equity are deliberately excluded, since their value depends on vesting, valuation and liquidity.
- Employers occasionally include items in CTC that are neither cash nor a benefit to you, such as a share of overheads. Those will simply appear under non-cash here.
Frequently asked questions
What is a good basic salary percentage?
Between 40% and 50% of fixed pay is the usual range and a reasonable balance. Below 30% reduces your PF, gratuity and HRA exemption; above 50% increases forced savings and reduces monthly cash.
Why is my CTC higher than my gross salary?
Because CTC includes employer costs that are not salary — employer PF, the gratuity provision, insurance premiums and sometimes equipment or training budgets. Gross salary is what your payslip starts from, after those are removed.
Should I ask for a different salary structure?
It is often possible, particularly on the split between basic and special allowance. Under the new tax regime the tax benefit of restructuring has narrowed considerably, so the main reason to ask is to raise basic for a better PF and gratuity position.
Is the insurance premium in my CTC worth anything?
Yes, if the cover is meaningful — a family floater including parents can be worth far more than the premium shown. But it is a benefit, not income, and it ends when you leave.