What is CTC?
CTC stands for Cost to Company.It is the total amount an employer spends on an employee in a year, including both direct and indirect benefits. CTC encompasses not only the basic salary but also all other allowances, perks, and contributions provided by the employer.
Components of CTC:
Direct Benefits (paid monthly or annually to the employee):
Special Allowance
Medical Allowance
Transport Allowance
Indirect Benefits (expenses incurred by the company on the employee):
Employer's contribution to Provident Fund (PF)
Gratuity
Medical Insurance
Other benefits like food coupons or subsidized meals, gym memberships, etc.
Variable Pay (performance-based incentives or bonuses):
Annual performance bonuses
Sales incentives
Retention bonuses
Important Note:
The CTC is not the actual take-home salary of the employee, as it includes components like employer contributions and bonuses, which may not be immediately received. The take-home salary is typically less due to tax deductions, PF contributions, and other statutory deductions.