CTC = Cost To Company
CTC or Cost to company is a term used by the human resource managers in a company. It is a common term used in many organisations in Asia and Africa. CTC refers to financial value of the the total package that an employee receives from a company in a year. It includes salary, bonus, compensation, benefit, insurance, opex etc.
CTC Components
- Monthly Gross Salary: Basic Salary, All Allowances,
- All Insurance Premium: Health Insurance, Medical Insurance, Life Insurance, Vehicle Insurance etc.
- Bonus: Festival Bonus, Profit Bonus, Performance Bonus etc.
- Provident Fund
- Gratuity Fund
- Equipment depreciation: Computers, Phones, Furnitures etc.
- Overhead cost: Space cost, Utility Bills etc
- Benefit package: Food,
Example:
CTC of an employee may be described as below
| Component of salary | CTC Amount ($) | Taxable amount |
|---|---|---|
| (A) Basic salary | 50000 | 50000 |
| (B) House rent allowance (50% of A) | 25000 | 25000 |
| (C) Conveyance allowance | 5000 | 0 |
| (D) Entertainment allowance | 2500 | 2500 |
| (E) Overtime allowance | 10000 | 10000 |
| (F) Medical reimbursements | 2500 | 0 |
| Gross salary | 95,000 | 87,500 |
| (G) Medical insurance | 2500 | |
| (H) PF (10% of A) | 5000 | |
| (I) Total Benefit | 20000 | |
| CTC = gross salary + benefit | 122,500 |
Break up of take home salary:
| Deductions/take home salary | Amount |
|---|---|
| Tax (10% of taxable amount) | 8750 |
| Employee provident fund (10% of basic salary) | 5000 |
| Professional tax | 1250 |
| Total deduction | 15000 |
| Gross salary | 95000 |
| Net salary (gross – deduction) | 80000 |
| Monthly take home salary | 6,666.67 |