What is CTC – Cost to Company Explained

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Article Index

1. Introduction

2. What is CTC in salary?

3. What is CTC in salary with example?

4. What is net salary/ in-hand pay?

5. CTC Benefits in India

 

Introduction

If you have ever come across someone who just bagged a great job or you have been a part of an interview, then you must be aware of the term CTC. Once the intense questioning is over, it comes the judgment time, and that’s when the payscale conversation begins.

Every company, whether it’s a corporate business or a venture operated by the government, offers various posts in the organization for different roles. Every role comes with a pay scale, which is referred to as CTC, which is the salary of the employee for that particular position in the company.

 

What is CTC in salary?

CTC full form is Cost to Company, which is a term used for the total salary package of an employee, and the term is used in countries like India and South Africa. It refers to the total amount of funds that an organization is spending on an employee in one year.

 

What is CTC in salary with example?

The CTC for an employee is calculated by adding up the money the company spends on an employee, including the additional benefits. For example: if the salary of an employee is Rs. 50,000, and the company is spending an extra of Rs. 5,000, then the CTC for that employee is Rs. 55,000, even though he might not get the whole amount of it.

The gross salary of an employee before income tax and other deductions is listed as the Cost to Company salary, which is per annum.

 

What is Net salary/ in-hand pay?

The in-hand salary that is the common term in India is the net salary that is left after deducting income tax and other deductions from the monthly pay. Focusing on just CTC is not advised as there can be a lot of factors that can be misleading and might not form the part of the monthly money in hand.

 

CTC Benefits in India

The deductions that take place in the CTC are adjusted in these ways:

  1. Interest-free loans
  2. Food coupons
  3. Company Leased Accommodation in Salary package
  4. Medical, life insurance premiums paid by the company
  5. Free cabs/ Taxi for office commute
  6. Income tax savings
  7. Office space rent
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Vineet Chaudhary is a content writer with computer applications as his background field. His interests range from writing and photography to going out for trips and rides on weekends.

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