What is ctc in salary with example?
If you’re on the job hunt or negotiating a salary package, you may have come across the term CTC salary. CTC stands for Cost-to-Company, and it’s a popular way of quoting a salary package in India. In this article, we’ll explain what CTC is, how it’s calculated, and give you an example to help you understand it better.
What is CTC salary?
CTC salary is the total cost that a company incurs on an employee annually. It includes not only the employee’s salary but also other benefits and perks provided by the company. These benefits may include health insurance, bonuses, travel allowances, retirement contributions, and other perks that an employee may be eligible for.
CTC is a popular way of quoting a salary package in India, and it’s used by many companies. It gives a clear picture of how much an employee costs the company and helps the employee understand the value of their total compensation package.
How is CTC salary calculated?
CTC salary is calculated by adding the employee’s total cost to the company. This includes their basic salary, bonuses, incentives, and other benefits provided by the company. Here’s an example to help you understand the calculation better:
Let’s say an employee is offered a job with a CTC salary of Rs. 10 lakhs per annum. The company provides the following benefits:
- Basic salary: Rs. 7 lakhs per annum
- Bonus: Rs. 1 lakh per annum
- Health insurance: Rs. 50,000 per annum
- Provident Fund: Rs. 70,000 per annum
- Travel allowance: Rs. 10,000 per month (Rs. 1.2 lakhs per annum)
To calculate the CTC, we add up all these amounts:
- Basic salary: Rs. 7 lakhs per annum
- Bonus: Rs. 1 lakh per annum
- Health insurance: Rs. 50,000 per annum
- Provident Fund: Rs. 70,000 per annum
- Travel allowance: Rs. 1.2 lakhs per annum
Total CTC: Rs. 10 lakhs per annum
As you can see, the CTC salary is the total cost that the company is incurring on the employee annually, including all the benefits and perks provided.
Negotiating a CTC salary package
When negotiating a salary package, it’s essential to understand the difference between CTC and take-home salary. Take-home salary is the amount that an employee receives after all the deductions, such as taxes and other benefits.
If you’re negotiating a CTC salary package, make sure to understand what benefits and perks are included. You can also negotiate for additional benefits or perks that are important to you. It’s also important to remember that a higher CTC does not necessarily mean a higher take-home salary, as there may be more deductions involved.
Conclusion
CTC salary is a popular way of quoting a salary package in India. It includes not only the employee’s salary but also other benefits and perks provided by the company. When negotiating a CTC salary package, it’s important to understand what benefits are included and to negotiate for additional perks that are important to you.