CTC means Cost To Company in India. CTC package is a term often used by private-sector Indian and South Indian companies while making an offer of employment to show the total remuneration.
What is CTC Gross Salary?
The gross salary before income tax and other deductions is what is listed as Cost To Company salary for a period of 12 months in a financial year.
What is CTC package?
The CTC package shows a detailed break-up showing basic salary, HRA (House rent allowance), and other such allowances.
Please note that CTC contains all monetary and non-monetary amounts spent on an employee.
What is CTC in resume?
CTC in a resume is generally asked to be filled in, to help the new employer know your current total gross salary (including any cash or non-cash benefits).
What is Net Salary – Take home pay – in-hand salary?
Take-home pay (known as in-hand salary in India) is the net salary after deducting income tax (TDS – tax deducted at source in India) and other deductions, from the gross monthly pay.
Use Take Home Salary Calculator – India to make a decision of accepting the new job offer or not by looking at your monthly in-hand earnings and deductions.
Do not just look at the figure of CTC as there could many components which may be misleading and may NOT form part of your monthly take-home.
Paid to employee monthly and form part of your take-home (in-hand salary) after deducting income tax plus any additional state taxes.
CTC Indirect Benefits
Benefits (also called Perquisites in legal Indian government terms) that an employee enjoys without paying for them. Your company takes care of them but add their monetary value to your CTC.
Off-course it is an expense for the company and hence, could be added to CTC.
1. Interest free loans, if any in CTC
Banking companies like ICICI allow their employees to get car/home loans at highly subsidized rates and then add the amount equal to the difference between the market and subsidized interest rate to employee’s CTC.
The interest that you did not pay (actually saved using a subsidized rate) is a benefit for you!
If you don’t take the loan, you won’t get this benefit, but it is anyway added to your CTC. Be careful while accepting the offer letter.
NOTE: The differential amount of benefit i.e. the money you save with a subsidized rate of interest is taxable. It depends on your company policy if they bear the tax or pass it on to you.
2. Food Coupons / Subsidized meals
Many MNC employers offer free lunch and evening snacks at the workplace. No lunch is free in this world.
On the other hand, the meal vouchers (or food coupons) help you save income tax too.
NOTE: Normally, you may not get this amount in-hand (as cash) even if you opt-out of eating in the employer’s cafeteria.
3. Company Leased Accommodation (CLA)
Your employer might provide you with company paid accommodation or pay rent to the landlord directly, saving you from the tension of finding a home and negotiating on rent deals.
The monetary value of CLA, that’s taxable, is added to your CTC, which is normally the rent and furniture cost.
Group medical and life insurance policies by your employer give you much better and comprehensive cover over the individual ones.
The cost is added in CTC and you can claim it for income tax rebate while filing ITR.
You will never be asked to pay a premium but in reality, you would have paid it as part of the group plan bought by your employer.
5. Free Cabs / Taxi for Office commute
You would be lured to a new job with the option of FREE transportation to the office. It is not really free even if it is subsidized.
Most employer’s would add it to your salary package (CTC).
Free or subsidized transport is still taxable either as FBT (Fringe Benefit Tax) paid by the employer or as your income tax if the employer passes it on to you.
6. Income tax savings
Sometimes companies offer you some benefits which are tax-free for you but are taxable to them.
Example: If you receive per diem allowances, they are subjected to FBT (Fringe benefits tax). It is supposed to be paid by your employer and not you.
Some companies do add the value of FBT in your CTC, that you, as an employee would be liable to pay if your company does not pay it.
FBT tax-saving added to CTC is a virtual amount that you will never receive in your hand.
Related: Unspent Per Diem Allowance Received Abroad Are Taxable In India
7. Office Space Rent
You must have heard about FAT pay packages (several crores for a fresher) that IIM (Indian Institute Of Management) or IIT (Indian Institute of Technology) graduates receive.
A deep look at their break-up of CTC would reveal the work cubicle rent too.
Example: If the company is spending INR 7000 per month on the cubicle that you would sit in at your work location, they would add the yearly rent in your CTC.
Your work location rent is also part of FAT CTC packages.
Employee Retirement Saving Contributions
Payments made to your long term savings account by your employer.
1. Superannuation
A pre-defined amount is contributed every month in your superannuation account, mostly offered by multinational companies as a way of saving for retirement.
You can withdraw it after you retire or at the time of leaving the organization.
Most employers do not directly give you cash on separation though. You get the option of converting the amount into some kind of insurance policy.
2. Employer Provident fund Contribution
Most employers contribute 12% (called PF) of basic salary every month to employee’s Provident fund account, shown in CTC. An employee also contributes 12% (called VPF).
Difference between Employer PF, Employee PF (Called VPF) and PPF.
Employer PF is part of CTC not shown on Salary Slip. It is NOT counted as part of your earnings and hence not taxed.
3. Gratuity is part of CTC
Paid @4.81% of total yearly basic salary, per Indian tax law, with no withdrawal allowed before 5 years.
If you leave the organization anytime before 5 years, you lose your Gratuity accumulation.
Make sure you serve a company for at least 5 years to claim your Gratuity.
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It refers to the total salary package of the employee. CTC is inclusive of monthly components such as basic pay, various allowances, reimbursem*nts, etc. and annual components such as gratuity, annual variable pay, annual bonus, etc.
It refers to the total salary package of the employee. CTC is inclusive of monthly components such as basic pay, various allowances, reimbursem*nts, etc. and annual components such as gratuity, annual variable pay, annual bonus, etc.
What is CTC? CTC stands for Cost to Company, and is calculated by taking the sum total of Direct Benefits, Indirect Benefits, and Savings Contributions. This refers to the yearly expenditure a company spends on an employee through its salary package.
Gross pay is how much employees earn before taxes and other withholdings, whereas net pay is the amount of money employees actually take home after all payroll deductions. For example, if an employee makes $8,000 gross per month and has $1,700 deducted for taxes and benefits, that individual's net pay would be $6,300.
Annual compensation, in the simplest terms, is the combination of your base salary and the value of any financial benefits your employer provides. Annual salary is the amount of money your employer pays you over the course of a year in exchange for the work you perform.
The average Indian salary ranges between 2,250 and ₹70,000 per month for an unskilled worker under the MWA, while the median salary in India or what half the population earns, is just 377.82 USD or ₹29,400 per month (pm) with some industries paying high salaries in India as compared to others.
Formula: CTC = Gross Salary + Benefits. If an employee's salary is ₹40,000 and the company pays an additional ₹5,000 for their health insurance, the CTC is ₹45,000. Employees may not directly receive the CTC amount as cash.
The CTC that an employee receives includes the base salary along with all types of allowances and deductions given to them. In-hand salary or the basic pay is a part of CTC that is left after all the deductions are done and allowances are removed. It is usually 40-50% of the total CTC.
The average CTC offer for MBA graduates range between INR 28 lakh per annum (IIM Calcutta) to INR 10 lakh per annum (IIM Jammu). The highest CTC touches up to Rs 80 lakhs or 1 crore at the top six IIMs.
Key Points. Gross income and net income are easy terms to confuse. Gross income is the total amount you earn (typically over the course of a year) before expenses.Net income is the profit your business earns after expenses and allowable deductions.
For example, when you tell an employee, “I'll pay you $50,000 a year,” it means you will pay them $50,000 in gross wages. Net pay is the amount of money your employees take home after all deductions have been taken out. This is the money they actually get on payday.
To calculate net income, take the gross income — the total amount of money earned — then subtract expenses, such as taxes and interest payments. For the individual, net income is the money you actually get from your paycheck each month rather than the gross amount you get paid before payroll deductions.
What is a compensation package? It includes more than just salary. It's everything of value, monetary and non-monetary, that an employer provides in exchange for the work you do — like incentives, benefits and perks.
Salary Package means the annual anticipated gross remuneration package which includes gross annual salary, applicable benefits for which there is a cash equivalent, profit share, commission, bonus, living allowances, overseas allowances and joining inducements.
There are many different perks and benefits that companies offer, but here are the most common items included in compensation packages: Salary/hourly wage, bonuses, and/or commissions. Retirement savings plan. Medical, dental, vision, life, and disability insurance.
If you earn more than 50 lacs a year you're in the top 0.3% of India. Above 25 lacs, you're in the top 1.2% of India. Only 3.2% of Indians earn above 15 lacs a year. Wealth is so unevenly distributed.
50k is not fresher salary. If you're getting that congrats. You're in top 10% of the country if you make 1L a month. People survive on 15k also – lifestyles change.
“While I think ₹1 lakh salary is not entirely the norm, it is easier to get to this number if you are working in the private sector, especially in cities such as Bengaluru, Delhi-NCR or Mumbai," said Roy. Industry experts concur.
It is basically 4.81% of the employee's basic salary. In this case, tax is based on the employee's gross salary and the employer is required to deduct TDS from an employee's salary. However, the basic salary of an employee should be at least 50-60% of their gross salary.
If you make ₹ 4,000,000 a year living in India, you will be taxed ₹ 1,533,000. That means that your net pay will be ₹ 2,467,000 per year, or ₹ 205,583 per month. Your average tax rate is 38.3% and your marginal tax rate is 43.2%.
A salary breakup structure or a CTC (cost-to-company) breakup structure is the structure in which the CTC is divided into various components to arrive at the in-hand salary of an employee. Understanding the salary breakup structure is equally important for employees & employers.
Similarly, people can negotiate different allowances like Travelling allowance, HRA, Food expenses, etc.and ask for more in the basic component of the CTC. Usually, it's 40-50% of the CTC, if you are being offered a lower percentage, then you ask for more, closer towards the 50% mark.
If you have a lifestyle that is above the lower middle class then 12 LPA is good enough. There are firms offering 5-6 LPA and people survive on that. They don't live, they survive. 12 LPA is good enough to live.
Is 1 lakh a good salary in India? Yes, earning 1 lakh per month is considered a good salary in India. It translates to INR 12 lakhs per annum, which is a substantial amount of money in India and can provide a comfortable standard of living, especially in smaller cities or towns.
Which is more―net pay or gross pay? Gross pay will likely always be more than net pay because net pay includes deductions from gross pay. Gross is an employee's total earnings, such as wages or salary, while net pay is their earnings minus payroll deductions, including taxes, benefits and garnishments.
Gross income will almost always be higher than net income since gross profit has not accounted for various costs (e.g., taxes) and accounting charges (e.g., depreciation).
Taxable income starts with gross income, then certain allowable deductions are subtracted to arrive at the amount of income you're actually taxed on. Tax brackets and marginal tax rates are based on taxable income, not gross income.
What is the difference between gross pay and net pay? Essentially, gross pay is the amount of pay before any deductions have been taken out of your wages. Net pay is the amount after all deductions have been taken and this is the actual amount of your paycheck.
The pay an employee receives before taxes and deductions are withheld is known as gross wages. Because gross wages are calculated before deductions, the actual take-home pay (also known as 'net wages') of an employee may be significantly less than their gross wage.
Some companies separate their net income into two types: net income attributable to the company, and net income attributable to common shareholders. Net income attributable to common shareholders is the true bottom line figure because the earnings exclude dividends paid to a separate class of stockholders.
Gross income is the money you earn from your hourly wages, salary, commissions, and bonuses. Net income is the money you're left with after taxes are paid and any deductions for health insurance or other benefits are taken. .
Gross income is the total revenue derived from sales of goods and services in a specified period. Net income is the profit left after deducting total business expenses from gross income.
HR Manager salary in India ranges between ₹ 2.8 Lakhs to ₹ 18.0 Lakhs with an average annual salary of ₹ 6.5 Lakhs. Salary estimates are based on 72k latest salaries received from HR Managers.
The Indian Police Service (IPS) offers a rewarding career with attractive remuneration. Additionally, positions such as Deputy Inspector General (DIG), Inspector General (IG), and Director General of Police (DGP) in various state police departments provide salaries exceeding 1 lakh.
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