How to Compare Two Job Offers Beyond the CTC Number
A higher CTC does not always mean more money in hand. A checklist and a worked example comparing a fixed offer with one that includes variable pay.
Why the CTC number alone does not decide an offer
Two offers arrive. One says Rs. 14 lakh, the other Rs. 15 lakh. The bigger number looks like the obvious winner, but CTC (cost to company) is what the employer spends, not what you receive. It can include employer provident fund, gratuity, insurance, meal cards and variable pay that is paid only if targets are met. Two packages with very different cash flow can carry the same CTC.
This post gives a checklist for comparing offers and a worked example using our CTC to take-home calculator. It is general information, not tax or financial advice. Your offer letter and salary breakup are the final word.
Step 1: split each offer into fixed, variable and benefits
Ask for the salary breakup in writing and sort every line into one of three buckets:
- Fixed cash. Basic, HRA, special allowance and other allowances paid every month. This is the only part you can plan rent and EMIs around.
- Variable or conditional cash. Performance bonus, joining bonus, retention bonus, stock-based pay. Ask what percentage is typically paid out, when it is paid, and whether a joining bonus must be repaid if you leave early.
- Benefits that are not cash. Health insurance, gratuity, employer PF contribution, meal cards, learning budgets. These have value, but they do not help with this month's bills.
Many offers include the full target variable in CTC. If one employer pays variable reliably and the other treats it as a stretch goal, the offers are not equal even at the same CTC.
Step 2: compare monthly in-hand pay
The CTC to take-home calculator takes one input, annual CTC, and applies fixed assumptions. From its code: basic is 40% of CTC, employee PF is 12% of basic, gratuity is basic ÷ 26 × 15 spread over 12 months and treated as not received in hand, a Rs. 75,000 standard deduction is applied, and tax is computed under the new regime with 4% cess. The result is monthly take-home after estimated tax.
Take two example offers. Offer A is Rs. 14,00,000, all fixed. Offer B is Rs. 15,00,000, but Rs. 2,00,000 of it is variable pay. The calculator cannot model variable pay, so we run it three ways:
| Scenario | CTC entered | Estimated monthly take-home |
|---|---|---|
| Offer A, all fixed | Rs. 14,00,000 | Rs. 1,00,547 |
| Offer B, variable paid in full (treated as if monthly) | Rs. 15,00,000 | Rs. 1,03,782 |
| Offer B, fixed part only (variable not paid) | Rs. 13,00,000 | Rs. 95,850 |
These figures come from running the tool's formula, so you get the same numbers by entering those CTC values. Read them as a range, not a promise. If Offer B pays its full variable, it is ahead by roughly Rs. 3,200 a month on paper, but the variable arrives once a year and is taxed when paid. If Offer B pays nothing, it is behind Offer A by about Rs. 4,700 a month. A larger CTC only wins if you believe the variable will be paid.
Notice what the tool does with the fixed part: entering Rs. 13 lakh treats the whole amount as structured pay with basic at 40%. If Offer B's real basic is different, the real take-home moves. Use the tool to rank the offers, then check against the actual breakup.
Step 3: check where basic salary sits
Basic salary drives several other numbers. Employee PF is a percentage of basic, so a higher basic means a larger PF deduction and lower monthly cash, but a bigger retirement balance. Gratuity is based on last drawn basic, so a higher basic raises it too. HRA is usually a percentage of basic. Two offers with the same CTC can leave you with different cash and different long-term benefits depending on how basic is set.
To see the long-term side, model your PF balance with the EPF calculator and your gratuity with the gratuity calculator. Gratuity under the Payment of Gratuity Act generally requires five years of continuous service with the same employer, with exceptions such as death or disablement. If you expect to leave in two or three years, gratuity in the CTC is worth little to you.
Step 4: do not forget rent and the tax regime
The calculator uses the new tax regime, where HRA exemption is generally not available. If you pay rent and are considering the old regime, the HRA calculator applies the three-way rule: the exemption is the lowest of the HRA received, rent paid minus 10% of basic, and 50% of basic in a metro (40% elsewhere).
For example, with Offer A's basic of about Rs. 46,667 a month, HRA of about Rs. 23,333 and rent of Rs. 25,000 in a metro, the three amounts are 23,333, 20,333 and 23,333. The exemption is the lowest, about Rs. 20,333 a month, or roughly Rs. 2,44,000 a year. That only helps if the old regime, with its other deductions, works out better for you than the new one. Compare both using the income tax calculator, which covers the new regime only, and your own deduction estimates for the old one.
Under the new regime for FY 2026-27, income up to Rs. 4 lakh is nil, and slabs run at 5%, 10%, 15%, 20%, 25% and 30% in steps of Rs. 4 lakh above that, with a Rs. 75,000 standard deduction for salaried people and a section 87A rebate that makes taxable income up to Rs. 12 lakh tax-free. Rules change with each Budget, so confirm current rates with the Income Tax Department before relying on them.
Step 5: weigh what the numbers miss
- Notice period and buyout. A long notice period reduces your negotiating freedom later. Check whether a buyout is allowed and who pays.
- Joining bonus clawback. Many bonuses must be repaid if you leave within a year or two.
- Insurance. Employer health cover for family can be worth thousands per year, but check the sum insured, whether parents are covered, and whether cover continues after you leave.
- Review cycle. A lower offer with a reliable annual review and clear promotion path can overtake a higher offer within two years.
- Location, commute and work mode. Rent and commute costs can outweigh a gap of a few thousand rupees a month.
- Stability. A smaller, uncertain employer may offer more cash but less security. This is your judgement, not a number.
A simple decision framework
- Write both offers as fixed, variable and benefits.
- Run the fixed-only CTC through the calculator. This is your floor.
- Run the full CTC. This is your ceiling. Decide how likely it is you reach it.
- Subtract the costs the offers do not share: rent, commute, notice buyout.
- Ask which offer still looks better if the variable pays only half. If the answer is the same, the decision is easy; if it flips, the decision depends on risk, not arithmetic.
Limits of this approach
The calculator is an estimate built on fixed assumptions, and it does not know your real salary structure. It does not model variable pay, bonuses, stock grants, professional tax, NPS contributions by the employer, insurance premiums or old-regime deductions such as 80C. It treats PF as leaving your pocket in a simplified way, so real payslips may differ. It cannot tell you whether the company is stable or the role is right for you. Use it to compare offers at a rough level, then ask HR for a sample payslip or a detailed breakup before you accept.