You never understood your pay slip till date. You must to know about CTC of an employee. You may
wonder why your take home salary is low than what you were told on your offer letter. The total cost to
company is sum of all benefits offered to your salary. Let’s understand what happens when CTC
becomes taking home. Here, is Naira CTC with example.
What is CTC?
CTC means Cost to Company it is amount of money that company will spend on particular employee in
particular year. Also, per month salary and other benefits that your company pays you are actual cost.
CTC package is term often used by private sector while making an offer of employment.
Gross salary that you receive is known as Cost to Company salary. And break up of CTC package are basic
salary, HRA (house rent allowance) and other allowances. Please note that CTC contains all monetary
and non-monetary amount spent on an employee. You can calculate your take home pay using online
For example Naira 25 moved to Mumbai four years back to turn her dream into reality. She took up
work as designer with an Information Technology firm. Naira pays Rs.10, 000 as rent for apartment but
ask her about how she manages her other expenses and she throws her hands up. She says that she do
not know about finances.
For instance, she doesn’t know her pay structure or what CTC called and in hand how much she will get.
This is common problem with working people and everyone confused with CTC. Also, see CTC salary
Below Particulars-Rs (per annum).
Basic – 480,000
Dearness Allowance – 48,000
Entertainment Allowance -12,000
House Rent Allowance – 96,000
Conveyance Allowance- 12,000
Overtime Allowance – 12,000
Medical reimbursement- 15,000
Gross salary- 675,000
Company contribution to PF – 57,600
Annual CTC – 732,600
Monthly CTC – 61050
Naira salary package is transparent. However, each company has its own method of calculating CTC.
Company may offer an attractive CTC pay but take home may be lower. Here are some components that
are commonly used in CTC.
IT companies add training costs in CTC. These costs are incurred by company for training employees. So
these do not come in form of take home.
If you are bank employee banks include interest subsidies in CTC. So, that you are entitled to loans on
Bonus is also including in CTC. These are variable components and you will be paid out as percentage
depends on your performance.
Also, companies include medical or life insurance cost. Some companies may add food subsidies that
you will get lunch in office canteen.
Some companies include gratuity in CTC. Gratuity is bonus that is paid when you resign or retire from
your company. You are entitled to gratuity only after completing 5 years in company. Some companies
who include gratuity as part of CTC in case you leave company before completing five year as required.
You must calculate your CTC package carefully and you make sure that you understand each and every
element correctly. Before accepting new job offer use take home salary calculator. Do not just look at
CTC figure as there will be many components which may be misleading and not in part of your monthly