CTC full form in salary is Cost to Company. The term is used primarily in private sectors meaning the cost a company spends on their employees annually. The CTC comprises various components such as fixed salary, EPF, Insurance, Professional Tax and more.
CTC Full Form is Cost To Company. CTC represents the comprehensive annual salary package provided to an employee. This figure encompasses all expenses that an organization incurs for an employee over the course of a year.
Monthly salary and other benefits that a company pays an employee are an expense for the company. ECTC full form is Expected Cost to Company; it is another term mainly used by job seekers to express their expected CTC when willing to join a company or apply in any field.
What is the Full Form of the CTC?
CTC full form is "Cost to Company". CTC includes a base salary and additional employee benefits to the employee in the service period. The term "CTC" is most commonly used in the private sector. However, in government and semi-government organisations, the base salary (in-hand salary) is known as the salary.
CTC is the total amount of money that a company spends on an employee in a year, including salary, allowances, and benefits. Below is the mathematical expression or formula for CTC:
| Formula for CTC | CTC = Gross Salary + Group Insurances + Allowances + Gratuity + Other Benefits |
- Gross Salary; It is the amount the employee receives before any deductions are made, such as insurance premiums or employee welfare deductions.
- Group Insurance; It is an insurance plan that covers a group of people for a particular tenure, commonly against death or illness.
- Allowances; Allowances are paid to employees to cover their expenses; it is also known as financial benefits for employees.
- Gratuity; It is an amount paid by the employers to the employees after 5 years or more of service in the company.
- Other Benefits; Other benefits include multiple kinds of compensation and benefits, which varies from company to company.
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What is CTC Breakup?
The CTC is not an employee's take-home salary, take home salary is the amount of money that the employee actually receives after deductions for taxes, insurance, and other expenses.
For example, in a private sector, if a company is paying the following INR 50,000 and providing some services, e.g., health, transportation, food, etc., then the CTC is INR 55,000. The employees may not get the CTC amount in their hands. CTC covers monetary and non-monetary amounts spent on an employee. There are various elements, including the benefits and contributions that form the part of a CTC.
Below are the examples for CTC breakup or Components of CTC:
| Component of Annual Salary | Amount (INR) |
| Basic Salary | 4,80,000 |
| Dearness Allowance | 48,000 |
| Conveyance Allowance | 8,000 |
| Entertainment Allowance | 6,000 |
| Overtime Allowance | 6,000 |
| Medical Reimbursements | 15,000 |
| House Rent Allowance | 60,000 |
| Gross Salary | 6,17,000 |
| Medical Insurance | 5000 |
| PF (12% of Basic Salary) | 57,600 |
| CTC=Gross Salary+Benefits | 6,79,600 |
As explained above, CTC includes various components. The main components are as follows:
- Basic Salary: It remains constant, and it includes Basic DA, HRA, etc. The basic salary is also known as the fixed salary.
- Allowances: Allowances is the amount paid by the employer to the employees for meeting the service requirements. It varies from company to company. Some commonly provided allowances are HRA, LTA, DA, Medical allowance, etc.
- Employer Provident Fund/Provident Fund: EPF/ PF is the investment made by both parties, i.e., Employer and Employee, each month. The lump-sum amount of EPF/PF acts as a retirement benefits scheme.
- Life Insurance and Health Insurance: The premium amount of insurance that will be deducted from the employee's CTC.
- Reimbursements: Reimbursement is the amount which an employee will not get as salary. A person needs to submit the bill to claim reimbursements.
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Difference Between CTC and ECTC
Cost to Company (CTC full form) encapsulates an employee's salary package, i.e., the employer's expense for an employee in a year. It includes Gross Salary, which consists of the payslip and any other benefits that include retirement funds, medical facilities, phone facilities, house facilities, travel allowance, meal allowance, and so on.
ECTC full form is Expected Cost to Company. It is the cost that the company expects to bear if they hire an employee. Or a minimum salary a candidate expects to get. So expected CTC is another way of saying ECTC.
Difference Between CTC and Net Salary
Cost to company (CTC full form) is the cost an employer incurs when hiring an employee. CTC involves several other elements and is cumulative of House Rent Allowance (HRA), Provident Fund (PF), and Medical Insurance, among other allowances added to the basic salary. In addition, CTC usually includes indirect benefits encapsulated in them.
For example, some banking companies provide loans at subsidized rates to their employees. Some companies offer coupons for lunch, which will be included in the CTC. Sometimes rent of accommodation will be added to CTC's basic full form. However, the Take-Home Salary or Net Salary is the salary breakup of an employee's income after tax and other deductions.
| Net Salary calculation formula: | Net Salary = Gross Salary - Income Tax - PPF - Professional Tax |
