Beyond CTC | Why Your ‘Good’ Salary in India Might Be a Myth and What to Do About It

Let’s grab a virtual coffee and talk about something that secretly keeps a lot of us up at night: income . Not just the number, but the whole complicated, anxiety-inducing dance around it. You know the one. You’re at a family function, and after the customary “Beta, shaadi kab kar rahe ho?”, the next question is inevitably a thinly-veiled “So, how much are you earning?”. Or you’re scrolling through LinkedIn and see a post from a batchmate announcing their new job with a fancy CTC figure that makes your stomach clench.

Here’s the thing. In India, we are obsessed with the idea of income, but we are spectacularly bad at talking about it honestly. We’re caught in a trap of big numbers and bigger expectations, and it’s leaving us feeling perpetually broke, even when our payslips say we should be comfortable. What fascinates me, as someone who loves digging into these things, is why. Why are we chasing a number that often feels like a mirage?

I initially thought this was just about inflation, but the more I looked, the more I realized the problem is deeper. It’s about what we’re measuring. So, let’s break down the great Indian income illusion and figure out what we should really be focusing on. This isn’t just about money; it’s about reclaiming your financial sanity.

The Great Indian CTC Illusion | Why Your Offer Letter Lies

This is ground zero for all our financial confusion. The Cost to Company (CTC). It’s the big, shiny number on your offer letter that you proudly tell your parents about. But then, your first salary hits the bank, and you stare at your phone screen in disbelief. Where did the rest of it go?

Let’s be honest, CTC is one of the most misleading metrics ever invented. It’s a number designed to make the company’s offer look as attractive as possible, but it has very little to do with the money you can actually spend.

Think of it like this: Your CTC is the total amount the company spends on you in a year. This includes:

• Your Basic Salary: This is the core, taxable part of your salary.
• Allowances: HRA, LTA, Special Allowance, etc.
• The Invisible Stuff (The Real Culprit): This is the part that never sees your wallet. It includes the employer’s contribution to your Provident Fund (EPF), the premium for your group health insurance, and sometimes even a projected performance bonus that isn’t guaranteed.

A common mistake I see people make is equating CTC with their annual income . They are not the same. Your actual take-home pay, or net salary, is what’s left after all deductions PF, professional tax, and the dreaded TDS (Tax Deducted at Source). And the gap between your CTC and your take-home salary can be a whopping 20-30%. Suddenly, that ₹15 lakh per annum package feels a lot more like ₹11 lakh. It’s a psychological trick, and we fall for it every time.

The ‘Good Salary’ Benchmark is a Moving Target (and Mostly Useless)

So, what is a good income in India ? This question pops up constantly on forums like Quora and Reddit, and the answers are all over the place. Someone in Bengaluru will say ₹20 LPA is just about enough to survive, while someone in Bhopal might feel like royalty with ₹8 LPA. And that’s precisely the point.

There is no magic number. Anyone who tells you there is, is selling you a fantasy. The idea of a “good salary” is completely relative and depends on two things you can’t ignore: your location and your lifestyle.

A ₹1 lakh per month salary in Mumbai, after paying exorbitant rent, commuting costs, and higher prices for everything from groceries to a night out, can leave you with less savings than a ₹60,000 salary in a city like Jaipur or Lucknow. This is why we need to stop obsessing over the gross income figure and start focusing on a much more powerful number: disposable income .

What is the disposable income meaning ? In simple terms, it’s the money you have left after you’ve paid all your essential bills and taxes.

Disposable Income = Your Net (In-Hand) Salary – Your Fixed Essential Expenses (Rent, EMIs, Utilities, Groceries)

This is your real “freedom fund.” It’s the money you can actually use for savings, investments, holidays, hobbies, or just ordering a pizza without a side of guilt. Tracking your disposable income, not your CTC, is the single biggest mindset shift you can make for your financial health. It tells you the truth about your financial situation, no matter what your offer letter says. You might find that looking at your finances through this lens helps you make better decisions, like choosing a financial institution that offers better savings options. Some even find it helpful to look into the performance of major financial players, like the Bank of India , to understand the broader economic landscape.

Beyond the 9-to-5 | The Real Path to Financial Breathing Room

Okay, so we’ve established that our primary salary is often a lie and the “good salary” benchmark is a myth. Depressing, right? Not really. It’s empowering. Because once you see the game for what it is, you can start playing it differently.

The solution isn’t always to just jump jobs for a 20% hike (which, as we’ve seen, might not translate to much). The real path to financial freedom lies in changing the question from “How do I get a raise?” to ” How to increase your income streams?”. Notice the plural.

This isn’t about the get-rich-quick “passive income” schemes you see on YouTube. Most “passive” income requires a ton of active work upfront. I’m talking about a more deliberate, skill-based approach.

1. Skill Stacking: Instead of being a one-trick pony, add complementary skills to your main profession. If you’re a writer, learn SEO and basic graphic design. If you’re a programmer, learn about project management or UX design. Each new skill makes you more valuable and opens up doors for freelance work or a better position.
2. Monetize Your Hobby (Carefully): Do you love baking? Are you a fantastic photographer? Can you create killer PowerPoint presentations? These are all potential side hustles. Start small, charge for your work, and see where it goes. The goal isn’t to replace your job overnight, but to create a small, independent stream of income that goes directly into your “freedom fund.”
3. Explore Real Passive Income India Avenues: Once you have some savings, you can explore true passive income. This includes things like investing in dividend-paying stocks, mutual funds, or real estate (though the barrier to entry is high). The key is to make your money work for you. Understanding market indicators like why Bank Nifty matters can be a good starting point for your investment education.

Building multiple income streams, even if they’re small, is a massive psychological win. It reduces your dependence on a single employer and gives you a sense of control that no CTC figure ever can.

FAQs | Your Burning Questions About Income, Answered

What’s the real difference between income and salary?

Think of it this way: a salary is a fixed, regular payment you receive from an employer for doing a job. It’s a specific type of income. Income vs salary is a broader concept; it’s all the money you receive from all sources, including your salary, freelance work, rent from a property, interest from savings, or profits from investments. Your goal should be to grow your total income, not just your salary.

How can I calculate my actual in-hand salary from my CTC?

While there are online calculators, a rough rule of thumb is to first subtract both the employee’s and employer’s PF contributions (12% of basic each, so 24% total). Then, deduct professional tax (varies by state) and your estimated income tax (TDS) based on your tax slab. For a quick estimate, assume your take-home will be around 70-80% of your CTC, but this varies greatly.

Is it better to have a higher salary in a big city or a lower one in a small town?

There’s no single right answer. You need to calculate your potential disposable income in both scenarios. A higher salary in a metro might get eaten up by rent and expenses, leaving you with less disposable income than a lower salary in a Tier-2 or Tier-3 city. It’s a trade-off between career opportunities and cost of living. Focus on the final number: what you get to keep.

I’m just starting my career. What should I focus on more than just the initial income?

For the first 3-5 years, prioritize learning and skill-building over salary. A job that pays slightly less but offers great mentorship, a strong brand name, and the chance to learn valuable skills will set you up to earn much more in the long run. Don’t chase an extra ₹5,000 in hand if it means stagnating in a dead-end role.

What are the new tax rules I should know about?

The Indian government introduced a New Tax Regime as an alternative to the Old one. The new regime offers lower tax rates but requires you to forgo most common deductions like HRA, LTA, and Section 80C. It’s crucial to calculate your tax liability under both regimes to see which is more beneficial for you. For the most accurate details, always refer to the officialIncome Tax Departmentwebsite.

So, the next time you find yourself in a conversation about income, try to steer it away from the shallow end of the pool. The number on our payslip doesn’t define our worth or our financial health. Understanding the difference between a flashy CTC and your actual disposable income is the first step. Building multiple streams of income is the next.

Ultimately, it’s not about earning the most money. It’s about building a life where your money serves you your goals, your peace of mind, your freedom. And that’s a conversation worth having.