{"id":4479,"date":"2023-04-14T18:42:03","date_gmt":"2023-04-14T13:12:03","guid":{"rendered":"https:\/\/fatakpay.com\/blog\/?p=4479"},"modified":"2025-11-11T16:56:36","modified_gmt":"2025-11-11T11:26:36","slug":"what-is-ctc","status":"publish","type":"post","link":"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/","title":{"rendered":"<strong>What Is CTC?<\/strong>"},"content":{"rendered":"\n<p>The <strong>Cost to Company<\/strong>, also known as CTC, is the cost that is paid annually to an employee. The CTC is calculated by adding the employee&#8217;s income and additional perks, such as EPF, <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/what-is-a-gratuity-calculator\/\" target=\"_blank\" rel=\"noopener\">gratuity<\/a><\/mark>, house allowance, meal coupons, medical insurance, travel expenses, etc. The <strong>CTC<\/strong> is always different from the amount of money you get to take home. It is also sometimes called the &#8220;package&#8221; or &#8220;total compensation&#8221; for a person.<\/p>\n\n\n\n<p>The purpose of <strong>CTC <\/strong>is to provide employers with an accurate understanding of the total cost of hiring a person. It allows employers to understand better the cost of providing a person with a job and helps them make better decisions regarding employee management.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#CTC_Calculation\" >CTC Calculation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#Direct_benefits\" >Direct benefits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#Indirect_Benefits\" >Indirect Benefits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#Savings_Contribution\" >Savings Contribution<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#CTC_example\" >CTC example&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#What_is_the_gross_salary\" >What is the gross salary?&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#The_various_components_of_Gross_Salary\" >The various components of Gross Salary<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#1_Basic_salary\" >1. Basic salary&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#2_Perquisites\" >2. Perquisites<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#3_Arrears\" >3. Arrears<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#4_House_rent_allowance\" >4. House rent allowance<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.fatakpay.com\/blog\/learn-finance\/what-is-ctc\/#Gross_salary_Components_that_are_not_present\" >Gross salary: Components that are not present<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CTC_Calculation\"><\/span><strong>CTC Calculation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>CTC<\/strong> consists of all the monetary and non-monetary amounts spent on an employee of the company. The parameters listed below are included in the in-hand salary and in the CTC pay. They are as follows:&nbsp;<\/p>\n\n\n\n<p><strong>CTC is calculated using the following formula:&nbsp;<\/strong><\/p>\n\n\n\n<p>CTC = Gross salary + Benefits* + Savings contributions or deductions<\/p>\n\n\n\n<p>*Benefits can be of the following types:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Direct_benefits\"><\/span><strong>Direct benefits<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Direct benefits are sums the company delivers to employees monthly as part of their take-home pay or net wage, subject to government taxes. They are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Basic salary<\/li>\n\n\n\n<li>House Rent Allowance (HRA)<\/li>\n\n\n\n<li>Leave Travel Allowance (LTA)<\/li>\n\n\n\n<li>Telephone or mobile phone allowance<\/li>\n\n\n\n<li>Vehicle allowance<\/li>\n\n\n\n<li>Special allowance<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Indirect_Benefits\"><\/span>Indirect Benefits<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Indirect benefits are those the employee receives at no expense to the organisation. The employee&#8217;s costs are paid for on their behalf by their company, and the amount is added to the employee&#8217;s CTC.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Bonuses or incentives based on performance<\/li>\n\n\n\n<li>Overtime compensation<\/li>\n\n\n\n<li>Employer-provided accommodations<\/li>\n\n\n\n<li>The employer pays for utilities such as power and water.<\/li>\n\n\n\n<li>Salary arrears<\/li>\n\n\n\n<li>Coupons for meals<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Savings_Contribution\"><\/span>Savings Contribution<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Savings contribution is the amount of money an employee contributes to their CTC, for example, <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/what-is-epf\/\" target=\"_blank\" rel=\"noopener\">EPF for retirement<\/a><\/mark>. They are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Gratuity Amount:<\/strong> According to Indian legislation, it is paid at 4.81%, and the employee forfeits the sum if he or she leaves the company before completing 5 years of service.<\/li>\n\n\n\n<li><strong>Employer Provident Fund Contribution:<\/strong> The employer contributes 12% of an employee&#8217;s base pay to their PF account.<\/li>\n\n\n\n<li><strong>Superannuation:<\/strong> A predetermined sum is donated to an account, from which the employee withdraws when they retire.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CTC_example\"><\/span><strong>CTC example&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If an individual earns 60,000 and their employer contributes an additional 5,000 for health insurance, the CTC is 65,000.&nbsp;<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p>\u201c Due to legal constraints, companies frequently put some CTC in the special allowances category.\u201d<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_gross_salary\"><\/span><strong>What is the gross salary?&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The money a person receives each month or year before deductions is their gross salary. Gross salary comprises all sources of income and is not limited to cash payments.<\/p>\n\n\n\n<p>Basic pay, house rent allowance, provident fund, leave travel allowance, medical allowance, and professional tax are among the most essential components of gross remuneration. Employees compensated for their efforts are sometimes paid a gross wage as their <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/en.wikipedia.org\/wiki\/Cost_to_company\" target=\"_blank\" rel=\"noopener\">CTC<\/a><\/mark>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_various_components_of_Gross_Salary\"><\/span><strong>The various components of Gross Salary<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Basic_salary\"><\/span>1. <strong>Basic salary&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The term &#8220;basic salary&#8221; refers to the percentage of an employee&#8217;s overall income that includes no allowances or perquisites. The basic pay is not subject to any tax breaks or deductions. A person&#8217;s <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/what-is-salary-advance\/\" target=\"_blank\" rel=\"noopener\">basic salary<\/a><\/mark> is usually less than their take-home or gross pay.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Perquisites\"><\/span>2. <strong>Perquisites<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Perquisites are benefits provided to employees in addition to their base wage and specific allowances, such as health insurance. They can be classified as benefits received by an employee as a direct result of their employment in an organisation. These perquisites are additional monetary or non-monetary benefits provided to employees in addition to their salaries and allowances.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Arrears\"><\/span>3. <strong>Arrears<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An arrears payment is a sum payable to an employee due to a wage increase or raise.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_House_rent_allowance\"><\/span>4. <strong>House rent allowance<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A house rent allowance, or HRA, is a monetary benefit an employer grants to help with living expenses. An employee&#8217;s housing allowance (HRA) can be used to pay the cost of renting a home near their place of employment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Gross_salary_Components_that_are_not_present\"><\/span><strong>Gross salary: Components that are not present<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Payment of medical bills&nbsp;<\/li>\n\n\n\n<li>Travel concessions<\/li>\n\n\n\n<li>Leave encashment<\/li>\n\n\n\n<li>Free lunches, snacks, or other refreshments.<\/li>\n\n\n\n<li>Gratuity<\/li>\n<\/ul>\n\n\n\n<p>Additional links:<\/p>\n\n\n\n<p>Thank you for reading our blog! We hope you can apply these learnings when you consider opening a <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/what-is-a-demat-account\/\" target=\"_blank\" rel=\"noopener\">Demat account<\/a><\/mark> \ud83d\ude42 Here are some other blogs\/LinkedIn articles for you to check out.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/pulse\/what-nbfc-fatakpay\/?trackingId=D2%2B1JHBR2HJnAYNnR2K8Rw%3D%3D\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/pulse\/what-nbfc-fatakpay\/?trackingId=D2%2B1JHBR2HJnAYNnR2K8Rw%3D%3D<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/pulse\/rise-fintech-its-impact-traditional-financial-institutions-fatakpay\/?trackingId=KAxZ0MrQ0npWYbWKTdkaZA%3D%3D\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/pulse\/rise-fintech-its-impact-traditional-financial-institutions-fatakpay\/?trackingId=KAxZ0MrQ0npWYbWKTdkaZA%3D%3D<\/a><\/p>\n\n\n\n<p>About FatakPay:&nbsp;<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/\" target=\"_blank\" rel=\"noopener\">FatakPay<\/a><\/mark> provides <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/blog\/fatakpay-com-the-future-of-corporate-finance-spending-virtual-credit-cards\/\" target=\"_blank\" rel=\"noopener\">virtual credit<\/a><\/mark> facilities for all. It&#8217;s available on your phone and caters to your everyday needs in both online and offline formats. Payments are done seamlessly through UPI\/QR codes. The solution provides an almost zero cost, free, quick, transparent and secure way to transact in a multilingual format with a Scan Now, Pay Later facility and easy repayment options.<\/p>\n\n\n\n<p>Link to the Website: <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/fatakpay.com\/\" target=\"_blank\" rel=\"noopener\">https:\/\/fatakpay.com\/<\/a><\/mark><\/p>\n\n\n\n<p>Link to FatakPay App: <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/link.ftkp.in\/2uSI\/dkasgvnf\" target=\"_blank\" rel=\"noopener\">https:\/\/link.ftkp.in\/2uSI\/dkasgvnf<\/a><\/mark><\/p>\n\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"BlogPosting\",\n  \"headline\": \"What is CTC?\",\n  \"description\": \"Understand what Cost to Company (CTC) means, how it\u2019s calculated, and the difference between gross salary, net pay, and benefits.\",\n  \"image\": \"https:\/\/fatakpay.com\/blog\/wp-content\/uploads\/2025\/11\/blog-135.jpg\",\n  \"datePublished\": \"2023-04-14\",\n  \"dateModified\": \"2023-04-14\",\n  \"mainEntityOfPage\": {\n    \"@type\": \"WebPage\",\n    \"@id\": \"https:\/\/fatakpay.com\/blog\/what-is-ctc\/\"\n  },\n  \"author\": {\n    \"@type\": \"Organization\",\n    \"name\": \"FatakPay Digital Pvt. 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The CTC is calculated by adding the employee&#8217;s income and additional perks, such as EPF, gratuity, house allowance, meal coupons, medical insurance, travel expenses, etc. The CTC is always different from the amount of money you get<\/p>\n","protected":false},"author":1,"featured_media":4484,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[260],"tags":[123,97,95,103,191],"class_list":{"0":"post-4479","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-learn-finance","8":"tag-ctc","9":"tag-fatakpay","10":"tag-financial-wellness","11":"tag-investments","12":"tag-what-is-ctc"},"_links":{"self":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/4479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/comments?post=4479"}],"version-history":[{"count":10,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/4479\/revisions"}],"predecessor-version":[{"id":6790,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/4479\/revisions\/6790"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/media\/4484"}],"wp:attachment":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/media?parent=4479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/categories?post=4479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/tags?post=4479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}