What is CTC?

CTC is nothing but the cost that the company incurs to employ you and keep you employed. It includes your pay and anything else that the company may incur to keep you in employment. Here is Avni`s CTC or Cost to Company.

Particulars-Rs (per annum)

Basic 480,000
Dearness Allowance 48,000
Entertainment Allowance 12,000
House Rent Allowa`nce 96,000
Conveyance Allowance 12,000
Overtime Allowance 12,000
Medical reimbursement 15,000
Gross salary 675,000
Company`s contribution to provident fund 57,600
Annual CTC 732,600
Monthly CTC 61050

Avni`s salary package is quite transparent. However, each company has its own method of calculating CTC. Companies may offer an attractive CTC pay structure but the take home may be substantially lower. Here are some components that are commonly used in the CTC:

1. IT companies often add training costs in the CTC. These costs are incurred by the company for training the employees. So, naturally these do not come in the form of take home.

2. Banks include interest subsidies in CTC. That is, if you are a bank employee, you are entitled to a discounted rate on loans.

3. Performance bonuses are also included in the CTC. These are variable components and you will be paid out a percentage of the bonus depending on your performance.

4. Companies may include the cost of group medical or life insurance. Some companies may add food subsidies, that is, you may be getting a subsidy on your lunch in the office canteen.
5. Some companies include gratuity in the CTC. Gratuity is a sort of bonus that is paid out when you resign or retire from your company. The catch: You are entitled to gratuity only after completing 5 years in the company. Some companies who include gratuity as part of CTC pay you the propornate amount as ex-gratia, in case you leave the company before completing five year as required.

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