Cost to Company { CTC }

CTC means Cost to Company. It is a cost which occurs to the company in a year on each employee. Employers pay a fixed amount of money to employees known as salary. Salary has various components. CTC is referred to the complete package offered to an employee including additions and deductions such as allowances, fixed or variable incentives, other special allowances and deductions like PF, Insurance etc. Basically, CTC includes all the components of the salary structure in Indian Payroll.

CTC = Gross Salary + (Direct Benefits + Indirect Benefits + Saving Contributions) or deductions

CTC means Earnings + Deductions

What goes in CTC?

  • Direct benefits: Basis Salary, Medical Allowance, HRA (House Rent Allowance), DA (Dearness Allowance), LTA (Leave and Travel Allowance), Vehicle Allowance, Phone Allowance, Incentives, Bonus, Special Allowance.
  • Indirect benefits: Interest fee loans, Subsidized Meals and Food coupons, Company Leased Accommodation, Life and Medical Insurance Premiums, Income Tax Savings, Office Space Rent.
  • Saving contributions: SuperAnnuation Benefit, EPF (Employee Provident Fund), Gratuity.

Note: Neither do CTC or Gross Salary is a take-home salary of an employee in India Payroll.

What is Gross Salary?

When we remove EPF, Gratuity and other deductions from CTC, the amount is known as Gross Salary.

Gross Salary = Basic Salary + HRA + Special Allowance + Conveyance Allowance + Medical Allowance + LTA