CTC Full Form: CTC refers to the annual salary package of an employee. Cost To Company is the full form of CTC. It signifies the total amount of expenses incurred on an employee by an organization in a year. The concept of CTC is followed in India and South Africa. The term CTC can be found along with the salary packages offered by the reputed organizations. This article includes the full form of CTC along with its detailed break-ups.
Calculation of CTC
Cost to company, full form of CTC, includes all monetary and non-monetary amounts spent on an employee. The CTC package shows the detailed break-up of basic salary, HRA (House rent allowance), and other such allowances.
CTC = Direct benefits + Indirect benefits + Company Contribution
Here, Direct benefits refer to the Gross salary of an employee.
Gross salary = Basic Salary + Dearness Allowance (DA) + Conveyance allowance + House Rent Allowance + Leave Travel Allowance (LTA) + Incentives or bonuses + Special / City Compensatory allowance etc.
Indirect benefits = Interest free loans, if any + Food Coupons / Subsidized meals + Company Leased Accommodation + Medical/Life Insurance premiums paid by employer 6 Income tax savings + Office Space Rent
Company Contribution = Employer Provident fund + Gratuity + any other perks
Take-home pay/in-hand salary is the net salary after deducting income tax (TDS – tax deducted at source in India) and other deductions, from the gross monthly pay. Take/home pay helps It decide on accepting a new offer or not. A basic breakdown of CTC of an employee is given below-
| Component of salary (per annum) | Amount |
| Basic salary | 500,000 |
| Dearness allowance | 50,000 |
| Conveyance allowance | 12,500 |
| Entertainment allowance | 12,500 |
| Overtime allowance | 12,500 |
| Medical reimbursements | 15,600 |
| House rent allowance | 100,000 |
| Gross salary | 703100 |
Below are examples of benefits for the above employee:
| Medical insurance | 2100 |
| Provident fund (12% of basic) | 60000 (12% of 5.00,000 |
| Laptop | 50000 |
| Total benefits | 113100 |
Cost to Company (CTC) =Gross Salary + Benefits
703100+113100= 816200
Thus Basic pay comes to around 60% -70% of the CTC package.
Conclusion
CTC full form is Cost To Company. It means the total amount of expenses incurred on an employee by an organization in a year. This article includes the full form of CTC along with its detailed break-ups.
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