CTC Full Form

CTC full form is Cost to Company. CTC is the average cost that the company bears to hire an employee. The actual salary may not be the same as the figure mentioned in the offer letter because in hand salary is completely different from the CTC. The company policy and agreement varies from company to company. The company profile, job role and the structure plays a major role in  deciding CTC for an individual. All the salary benefits combined together come under the ambit of CTC. Moreover, many of the indirect benefits and perks are also included in CTC (such as meal coupons, sodexo cards, subsidized meals, cab facility etc).

What is CTC?

CTC full form is Cost to Company. The term is generally used for a worker's overall income package in Asian Countries. Once in a while, nearly each employee at the start in their respective profession should have gone through the income calculation whilst getting their first income. Therefore, questions like how income is calculated, what is CTC, why humans get much less reimbursement as stated in their offer letter, why our in-hand income is much less than our CTC, etc., are not unusual confusion for each worker. To get the clear concept about the CTC break-up, read the information provided below.

What is the Full Form of CTC?

The CTC full form is Cost to Company. The term is generally used for a worker's overall income package. Thus, the CTC method is the full amount spent by the company in a year on employees.

The meaning of CTC is the full cost that may be incurred by the company to  the employer, consistent with the year. Monthly income and different advantages that an employer can pay a worker are a fee for the employer. The CTC is generally used by Indian private companies  whilst presenting a service in the form of the amount to the employee. CTC includes all amount of cash which has been spent on the worker.

The formula for calculating CTC of an employee is:

CTC = Gross Salary + Benefits

CTC consists of a base income and further worker advantages to the worker in the service period. It is mostly used in the non-public sector. However, in government and semi-government organizations, the base income (in-hand income) is referred to as the income. So the based income and CTC income suggest the identical thing.

For example, in the private sector, if an employer is paying the salary of INR 50,000 and offering a few services, e.g., health, transportation, food, etc., then the CTC is INR 55,000. The personnel won't get the CTC amount of their hands.

Below are the examples for CTC breakup in tabular representation:

The above table represents the yearly add-ons of the earnings. Apart from the Basic Salary, the enterprise will pay more allowance and benefits which might not be the in hand earnings.

What is CTC Breakup in the Salary Structure?

Cost-to-enterprise or extended form of CTC covers financial and non-financial amounts spent on a worker. There are diverse elements, which includes the contributions that form a part of a CTC. As defined above, CTC consists of diverse add-ons:

The essential benefits are as follows:

• Fixed Salary in CTC

It is the most important part of CTC, which someone could be getting, as stated in the offer letter. It stays constant and it consists of Basic DA, HRA, etc. The constant earnings is likewise called the Basic earnings. The fixed salary component also includes Conveyance allowance.

• Variable Salary in CTC

It is a performance-primarily based total earnings, with a purpose to be paid as an advantage for the worker performing better in terms of working than others. The variable salary is the amount apart from fixed salary, which entirely depends on the individual performance.

• Net Salary in CTC

The amount a worker gets in hand after deducting the different taxes as in line with the enterprise policy. It is likewise called the Take-domestic earnings or take-home salary.

Below is the components to calculate Net Salary,

Net Salary = Gross Salary - Income Tax - PPF - Professional Tax

What are the other benefits and allowances of CTC?

There are many additional benefits provided with  CTC such as Allowances, Employer Provident Fund/Provident Fund, Public Provident Fund, Gratuity, Life Insurance and Health Insurance, Professional Tax etc. The details of the benefits are:

• Allowances

Allowances include the amount y paid by the organization to the personnel for fulfilling the service requirements. It is an additional amount paid other than the fundamental earnings. It varies from enterprise to enterprise. Some normally offered allowances are HRA (House Rent Allowance), LTA (Local Travel Allowance), Conveyance Allowance (travel allowance), DA (dearness allowance), Medical allowance, etc.

• Employer Provident Fund/Provident Fund

EPF/ PF is the funding made through each party, i.e., Employer and Employee, every month. The lump-sum quantity of EPF/PF acts as a retirement benefits scheme. Public Provident Fund/PPF. The organization has nothing to do with PPF and it isn't always stated in the payslip or provided letter. PPF accounts are typically opened both for tax-saving functions or a long-time period of funding.

• Gratuity

Gratuity is the organization's amount given to the worker after leaving the job for the services offered by them. The amount will be deducted each month from the worker CTC and paid after 5 years of career.

• Life Insurance and Health Insurance

Nowadays, maximum organizations offer medical health insurance and existence coverage to their personnel. The premium amount of coverage could be deducted from the worker's CTC.

• Reimbursements

Reimbursement is the amount which a worker will now no longer get from their earnings or in salary. The employer needs to publish the invoice to claim reimbursements, e.g., medical treatments, smartphone bills, newspaper bills, etc.

What is the difference between CTC and ECTC?

Cost to Company (CTC) covers worker's earnings package, i.e., the organization's expense for a worker in a year. It consists of Gross Salary, which includes the payslip and every other benefits that consist of retirement funds, telephone/smartphone facilities, residence facilities, tour allowance, meal allowance and so on.

The ECTC full form is Expected Cost to Company. It is the value that the enterprise expects to endure in the event of  hiring a worker. And, it's far from the value that the enterprise/company intends to make certain they hire a worker.