CTC is the abbreviated form of cost to the company. This term explains the total amount of cost that a company spends on its employees. The CTC includes the salary of an employee along with other extra expenses that are provided by the company. It is the yearly package of the salary of any employee. Most of the companies now follow this CTC format to give salary to their employees.
CTC Full Form
CTC also contains all the different types of services that are provided to the employee by the company in the term of their service.
It can be calculated by adding gross salary, total salary, and other expenses.
In simpler terms, CTC is a lot more than just salary. It includes expenses such as phone bills, travel expenses, house rent, medical rent, meals, etc. Office space rent may also be included in CTC by some of the large companies. In cases where other facilities like accommodation, care facilities, and drivers are allotted to the employee, these things are also added to the CTC.
This explains the fact that most of the cash that an employee receives is usually less than the actual CTC. Some of the cash money remains untranslated into cash.
For example: If the salary can be considered as follows :
Components of salary(annual) Amount
General salary 40,000
Dearness allowance 12,000
Entertainment allowance. 1200
Overtime allowance. 1200
Medical reimbursement 1500
House rent allowance 1900
Gross total 59,000
The number of benefits in each category will change from person to person and company to company. The benefits can be calculated as follows:
Medical insurance. 1000
Provident funds. 12% of the basic salary
Total benefits. 35,800
So according to this way, the total salary will be a sum of gross salary and benefits.
Therefore in this example, the total salary of employees will be 59000 + 35800 = 94800
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