To put it in simpler terms, Gross Salary is the amount paid before the deduction of taxes or other deductions and is inclusive of bonuses, overtime pay, holiday pay, and other differentials.Įmployee Provident Fund, in India, is an employee-benefit scheme prescribed by the Ministry of Labour which provides employees with facilities such as medical assistance, retirement, education for children, insurance support, and housing. Gross Salary is employee provident fund ( EPF) and gratuity subtracted from the Cost to Company (CTC). Other such allowances include medical, vehicle, mobile phone, incentives, and special allowances. This is basically a cost of living adjustment given to mitigate the effects of inflation on the economy. Note that an LTA only pays for the travel allowance not for other expenditures like food, drinks, and the like.ĭearness Allowance (DA): Inflation numbers keep rising year or year and Dearness Allowances are provided to tackle this issue. Leave Travel Allowance (LTA): LTA is yet another tax-exempt element of a CTC which is provided for employees to cover their travel expenses anywhere within the country. HRA usually comes with tax benefits in case employees pay for accommodation each year and comes up to about 10% of the take-home salary. House Rent Allowance (HRA): HRA is part of the CTC an employer provides its employees. The entire amount of your basic salary will be part of your in-hand salary.Īllowances: As part of your salary structure, you will receive a number of allowances which help you take care of your basic needs. Here’s every single element of a CTC broken down:īasic Salary: Unlike other aspects of CTC, your basic salary will not vary and remains a constant always. Special Allowance/ City Compensatory allowance, etc. Medical and Life Insurance premiums paid by employer CTC = Direct Benefits + Indirect Benefits + Savings Contributions Below is a tabular column which list out all the benefits and contributions that form the part of a CTC.ĬTC is basically the sum total of Direct Benefits (sum paid to an employee on a yearly basis), Indirect Benefits (sum the employer pays on behalf of the employee) and Saving Contributions (saving schemes the employee is entitled to). The various elements of Cost To Company (CTC): As mentioned above, Cost To Company involves a number of elements. 17,874 Components of CTC (Cost to Company) A breakdown of his yearly income is illustrated below: A has been hired by a company at a CTC of Rs. Let’s elucidate what CTC looks like with an example: This can be corrected by an individual by simply matching the CTC to the actual amount they are receiving. To put it in simpler terms, CTC is a company’s spending on hiring and sustaining the services of an employee.ĬTC is considered a variable pay as it varies based on various factors and thus when the CTC varies, the take-home salary or net salary of the employee varies. Basically, all these elements when combined, form the entire Cost to Company.
#CTC MEANS IN SALARY SLIP FREE#
These allowances may often include free meals or meal coupons, such as Sodexo and the like, office space rent, cab service to-and-fro office, and subsidized loans et al. CTC involves a number of other elements and is cumulative of House Rent Allowance ( HRA), Provident Fund (PF), and Medical Insurance among other allowances which are added to the basic salary. Cost to Company or CTCĬost to Company or CTC as it is commonly called, is the cost a company incurs when hiring an employee.
Let’s start with an explanation of Cost to Company, and later on get to all the other aspects of salary. On this page, you will learn all that you need to know about Cost to Company (CTC), Take-Home Salary, Net Salary, and Gross Salary, and the differences between them. If you are one of them, you don’t need to be ill-informed anymore. Difference between Home, Net and Gross salary