The total annual expenditure a company incurs for an employee, including salary, allowances, bonuses, and employer contributions to PF, ESI, and gratuity.
CTC represents the total cost of employing a person. It includes: Basic Salary, House Rent Allowance (HRA), Special Allowances, Employer's PF contribution, Employer's ESI contribution, Gratuity provision, Medical Insurance, and any other benefits. The in-hand or take-home salary is always lower than CTC because employee contributions (PF, ESI, professional tax, income tax) are deducted.
An employee's CTC is ₹12,00,000/year. Breakdown: Basic ₹4,80,000 + HRA ₹2,40,000 + Special Allowance ₹2,40,000 + Employer PF ₹57,600 + Gratuity ₹23,076 + Insurance ₹25,000 + Bonus ₹34,324.
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CTC includes employer contributions (PF, ESI, gratuity, insurance) that are paid on your behalf but not given as cash. Then employee deductions (PF, professional tax, income tax) are subtracted from gross salary to arrive at take-home.
The concept exists everywhere but the term 'CTC' is primarily used in India. Other countries use 'Total Compensation Package' or 'Total Remuneration'. The components differ by country — Australia includes Superannuation, Ireland includes PRSI contributions.
The total salary earned by an employee before any deductions such as income tax, provident fund, professional tax, or other statutory deductions.
The actual amount of money an employee receives in hand after all deductions including income tax (TDS), provident fund, professional tax, and insurance premiums.
A government-managed retirement savings scheme where both the employee and employer contribute a percentage of the employee's basic salary every month.
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