Cost To Company Calculations

CTC Calculation Formula:

\[ CTC = Salary + Allowances + Employer PF + Gratuity \]

CTC (INR):

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1. What Is Cost To Company (CTC)?

Cost To Company (CTC) represents the total amount of money a company spends on an employee in a year. It includes direct benefits (salary, allowances) and indirect benefits (PF, gratuity, insurance, etc.).

2. How Does The Calculator Work?

The calculator uses the standard CTC formula:

\[ CTC = Salary + Allowances + Employer PF + Gratuity \]

Where:

\( Salary \) — Basic salary component (INR)
\( Allowances \) — House rent, travel, medical, and other allowances (INR)
\( Employer PF \) — 12% of basic salary contributed by employer
\( Gratuity \) — Approximately 4.8% of basic salary for retirement benefit

Explanation: This calculation provides the total cost incurred by the company for employing an individual, including all statutory and non-statutory benefits.

3. Importance Of CTC Calculation

Details: Understanding CTC helps both employers in budgeting and employees in understanding their complete compensation package beyond take-home salary.

4. Using The Calculator

Tips: Enter basic salary and total allowances in INR. The calculator automatically computes employer PF contribution (12%) and gratuity (4.8%) to provide the total CTC.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between CTC and take-home salary?
A: CTC is the total cost to company, while take-home salary is the amount employee receives after deductions like PF, taxes, and other contributions.

Q2: Is PF contribution mandatory in CTC?
A: For organizations with 20+ employees, employer PF contribution (12% of basic) is statutory and included in CTC.

Q3: How is gratuity calculated?
A: Gratuity is calculated as (15/26) × last drawn salary × years of service, but for CTC estimation we use approximately 4.8% of basic salary.

Q4: What other components can be included in CTC?
A: Bonus, medical insurance, leave travel allowance, variable pay, stock options, and other perks may be included depending on company policy.

Q5: Can CTC vary between companies for the same role?
A: Yes, CTC structure varies significantly based on company policies, industry standards, and location factors.