Most often, freshers end up being confused when they get to know about their salary. However, it is imperative to have a clear understanding of salary, its breakups, and every component included in it.
Needless to say, words including CTC, basic salary, gross salary, allowance, reimbursements, tax deductions, employee provident fund, etc. usually lead to confusion for working individuals. If you are one of them, you are certainly in the right place now. We will help you learn how to calculate your salary and we are sure, you’ll be able to do it on your own after completing this blog. Also, HR managers should definitely know every point discussed below as they have a duty to help their new and existing employees when they come up with queries and doubts.
Let’s dive in.
Cost To Company (CTC)
Cost to Company, abbreviated as CTC is the total salary as well as benefits offered to a working individual in a year.
In simpler words, it’s the amount that an organization decides to give a person working for it.
It is important to note that Cost To Company includes a host of elements. A few of them are mentioned below:
- Basic pay
- Several allowances
- Other Elements like gratuity amount, annual variable pay, bonus, and much more.
In India, CTC is particularly used in the private sector to present the total remuneration of an individual.
You can use this formula:
CTC = Gross Salary + [Direct Benefits + Indirect Benefits + Savings Contributions] (or Deductions)
Elements of CTC
As mentioned earlier, Cost To Company includes many elements. Let’s talk more about them.
Take a look at the two vital elements of CTC:
- The gross salary, which includes basic salary, HRA, Several Allowances, and Medical reimbursement.
- Employee benefits, which includes EPF as well as medical insurance
In essence, CTC is a sum of Gross Salary and Benefits.
Talking about the Deduction bit, it includes Professional Tax, TDS, and EPF contributions. Simply put, we can say CTC as a sum total of Earnings and Deductions.
What is a CTC Calculator?
We are living in a digital era at present. Everything is fast these days. We can get anything and everything in just a matter of seconds. In such a scenario, manual CTC calculations can be a cumbersome task for many. Fortunately, we have a solution to this problem, i.e. CTC calculator. CTC calculator allows employees, HR managers, and payroll accountants to calculate the Net Salary to be paid to employees based on agreed CTC. Using a CTC calculator, a person can calculate his or her CTC in just a few minutes.
That’s it, we have come to the conclusion.
These are everything you need to know to calculate and understand your salary structure on your own. We hope this blog helped you to learn more about Cost To Company, its elements, and the CTC calculator. If you found this blog helpful, do not forget to share it with your friends who are starting to work.