CTC
Also called: Cost to Company, cost to company
What is CTC?
CTC, or cost to company, is the total annual cost of employing a person — salary, allowances, employer contributions to provident fund, gratuity provision, insurance and any benefits. It is not what the employee receives.
Why CTC matters
The gap between CTC and take-home pay is the most common source of disappointment at joining. Stating both figures in the offer prevents a conversation that otherwise happens in week one.
CTC formula
CTC = Gross salary + Employer PF + Gratuity provision + Insurance + Other benefits
Take-home is gross salary less employee deductions and tax.
How CTC works in practice
Build CTC from its components and show the employee the breakdown to net pay. Employer contributions and gratuity provisions belong in CTC because they are genuine costs, even though they never reach the bank account.
Worked example
A ₹6,00,000 CTC can translate to roughly ₹43,000–46,000 a month in hand, depending on structure and deductions.
Frequently asked questions
Employer contributions and provisions are part of CTC but never reach you, and employee deductions come out of the rest.