However, an IIT graduate recently sparked a conversation online by highlighting a reality that many fresh graduates only discover after receiving their first paycheck: the salary mentioned in an offer letter is often very different from the amount that actually reaches a bank account.
The Surprise Behind a ₹25 Lakh Package
Siddharth Maheshwari, an IIT Roorkee alumnus and Indian School of Business (ISB) graduate, shared his experience in a candid Instagram post. After joining a startup in Gurugram with a compensation package of ₹25 lakh per annum, he expected a substantial monthly salary credit.
Instead, when his first salary arrived, only around ₹1.45 lakh was credited to his account.
The amount was so much lower than he had anticipated that he initially thought there had been an error. Maheshwari admitted that he checked his bank balance multiple times, convinced that something must have gone wrong.
However, the issue was not with the bank—it was with a common misunderstanding of how Cost to Company (CTC) works.
The Difference Between CTC and In-Hand Salary
Like many first-time employees, Maheshwari had focused on the headline package figure. While ₹25 lakh per annum sounds impressive, the actual take-home salary depends on how the package is structured.
A typical compensation package is divided into several components, including:
* Basic salary
* House Rent Allowance (HRA)
* Special allowances
* Performance-linked incentives
* Employer contributions to provident fund
* Insurance benefits
* Gratuity
While all of these elements contribute to the total CTC, not all of them are paid directly as cash each month.
Where the Money Goes
Maheshwari explained that his salary structure included standard earnings components such as basic pay and allowances. However, several deductions significantly reduced the amount that eventually reached his bank account.
These deductions included:
* Employee Provident Fund (PF) contributions
* Professional tax
* Income tax deductions
* Other statutory contributions
After accounting for all these deductions, his monthly take-home salary was far lower than the figure he had mentally calculated by simply dividing ₹25 lakh by 12.
Why High CTC Doesn't Always Mean High Monthly Income
One of the biggest misconceptions among fresh graduates is assuming that the entire CTC is paid as salary. In reality, companies often include benefits such as employer PF contributions, gratuity, insurance coverage, and variable pay within the overall package.
These components increase the advertised CTC but do not necessarily increase the cash credited to an employee's account every month.
As a result, two employees with identical CTCs may receive very different monthly salaries depending on the structure of their compensation packages and applicable tax deductions.
A Valuable Lesson for Fresh Graduates
Maheshwari's post resonated with thousands of young professionals because it highlighted a financial reality that is rarely discussed openly during campus placements and job negotiations.
The excitement surrounding a large offer letter often creates expectations that do not align with the actual salary slip. For many employees, this realization arrives only after receiving their first paycheck.
His advice was straightforward: rather than focusing solely on the annual CTC, candidates should ask recruiters about their expected post-tax monthly in-hand salary. This figure provides a much clearer picture of what they can actually spend, save, invest, and use for everyday expenses.
The Number That Truly Matters
While a high CTC remains an important indicator of earning potential, it does not tell the complete story. Understanding salary structures, deductions, taxes, and employee benefits is crucial for making informed career decisions.
As Maheshwari's experience demonstrates, the most important number is not always the one printed in bold on the offer letter. Instead, it is the amount that finally appears in the bank account at the end of the month.
