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Startup·8 min read
Payroll & CTC Structuring: True Cost of Hiring in India
Structure salary so in-hand pay, PF, TDS, and employer cost are transparent—before you extend an offer.
May 05, 2025
What you'll take away
- CTC ≠ in-hand—basic, HRA, allowances, PF, and TDS change take-home.
- Basic drives PF and gratuity—balance tax efficiency and compliance.
- Professional tax varies by state.
- Pelago models CTC and runs monthly payroll.
CTC components
| Basic salary | 40–50% of gross typical |
|---|---|
| HRA | Tax benefit if rent paid |
| Special allowance | Flexible bucket |
| Employer PF | ~12% of basic |
| Gratuity accrual | Long-term liability |
Tax regime choice
New vs old regime per employee—payroll must support both with proof collection in old regime.
Founders on payroll: plan advance tax on other income too.
Monthly payroll outputs
- Payslips with breakup.
- TDS under 192 deposited.
- PF ECR filed.
- Reimbursement tracking.
Founder tip: Use our Employee Cost calculator on /tools before promising '₹1L in-hand'.
Pelago payroll
Offer letter CTC design, compliance registration, monthly processing, and Form 16 at year-end.