What CTC really means, how a payslip is structured, and how monthly net pay is actually calculated.
"But my CTC is higher than what I receive." It's the most common payroll question employees ask — and it comes from confusing CTC with take-home pay. Here's how the two relate, and how each month's net pay is built.
The gap between them is the deductions and employer-side costs that never appear in the bank account.
Most payslips have two halves — earnings and deductions:
Net pay = gross earnings − total deductions. That single line is what "in-hand salary" means.
Even at a fixed CTC, in-hand pay can vary because monthly earnings adjust for days actually worked. Unpaid leave reduces earnings; a mid-year salary hike raises them. This is exactly why attendance and leave need to feed payroll directly — see from attendance to payroll.
Merik holds each employee's CTC and calculates monthly payroll from the attendance and leave already recorded — applying salary hikes for the months they take effect. The result is an accurate monthly payslip that ties back to the days worked, with gross, deductions and net pay laid out clearly. Read how leave affects pay or explore the payroll module.
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CTC (Cost to Company) is the total annual amount an employer spends on an employee, including benefits and employer contributions. In-hand salary is the amount that actually reaches the employee's bank account each month after deductions such as PF, professional tax and any unpaid leave.
A payslip typically shows earnings (basic pay, HRA and other allowances) that add up to gross pay, and deductions (provident fund, professional tax, and any leave or advance adjustments). Gross pay minus deductions equals net or in-hand pay.
Monthly net pay is the employee's gross pay for the month minus all deductions. Attendance and unpaid leave for the month adjust the earnings, so net pay reflects the days actually worked.
A practical monthly process for founders and office managers.
The recurring errors that cost time, money and employee trust.
Why generators produce wrong slips, and a process that issues every slip by the 7th.