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What is the full form of CTC

CTC: Cost To Company

CTC stands for Cost To Company. It is the annual salary package of an employee. It indicates the total expenses that a company/organization spends on an employee in a year. Nowadays, most companies offer their salary in the form of CTC.

CTC is not the actual salary of the employee. It also includes the facilities given to the employee during the service period.

It clearly means that CTC is not only the salary, but it also includes many things like a meal, medical facilities, phone bills, house facilities, travel allowance, etc. Some companies, especially large investment banks, also add office space rent in the CTC package. Furthermore, if your company provides you with accommodation, a car, a driver, etc. the value of these facilities will be included in your CTC.

So, some of the components of your CTC are not translated into actual take-home cash and what you get in hand always remains less than your CTC.

CTC full form

Let's take an example to understand it well:

Component of salary (per annum) Amount
Basic salary 480,000
Dearness allowance 48,000
Conveyance allowance 12,000
Entertainment allowance 12,000
Overtime allowance 12,000
Medical reimbursements 15,000
House rent allowance 96,000
Gross salary 6,75,000

Benefits may be changed from company to company. Let's take an example of benefits for the above employee are:

medical insurance 2000
provident fund (12% of basic) 57,600 (12% of 4,80,000)
laptop 50000
total benefits 109600

What is included in CTC?

All expenditures on an employee, both financial and nonfinancial, are included in the CTC. These consist of:

  • Base Salary
  • Dearness Compensation (DA)
  • Bonuses or incentives
  • Allowance for conveyance
  • Renter's Assistance (HRA)
  • medical reimbursement
  • Leave Travel Concession or Allowance (LTA/LTC)
  • Automobile Allowance
  • Allowance for phones and/or mobile devices
  • Special Compensation

What distinguishes a gross wage from a CTC?

Gross salary is the total amount of compensation that an employer or business pays an employee for their employment. The Cost to the Company, or CTC, on the other hand, would represent the overall compensation for employees. The CTC is an employee's gross pay, but the net salary is the money they actually take home. It covers the take-home income in addition to a number of benefits and allowances.

The amount will be referred to as gross salary if EPF, gratuities, and other deductions are not included in the CTC.

Basic Salary plus HRA, Special Allowance, Conveyance Allowance, Medical Allowance, and LTA equals Gross Salary.

On the other hand, an employee's entire income after deductions for taxes, bonuses, and other non-compensatory expenses is referred to as their "in-hand salary."

Which advantages are covered under CTC (Cost To Company)?

The CTC includes benefits like health insurance, pensions, housing, travel, and entertainment allowances in addition to income and salary.

CTC is the sum of the direct, indirect, and savings contributions.

Direct Advantages: This refers to the employee's take-home pay, net wage, or the sum that the employer pays the worker each month and is subject to tax.

Indirect Advantages: These are the benefits that employers do not have to pay for but that employees do. They are added to the employee's CTC even if the company pays them on their behalf because they are a company expense.

Contribution to Savings: This is the amount that additional benefits, like EPF, add to an employee's CTC.

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