The full form of CTC is Cost to the company. The monetary benefits which a company gives to its employee refers CTC. It is basically the annual salary package which a company offers. In this article i have given information on how to calculate CTC .
Generally we face this term while giving interview, where we are asked about our expected CTC. CTC is commonly known as the annual salary package.
When we receive our offer letter we get confuse of CTC components. Generally the CTC contains the following components.
- Basic Salary
- Some tax saving allowances like HRA, Conveyance allowance etc
- Special allowance
- Provident Fund
Basic salary is the basic amount on which all other allowances are calculated. It is generally kept as 50% of the total salary.
Tax saving allowances has long list, but the common are HRA and conveyance allowances. HRA means house rent allowance.
Conveyance allowance is tax exempted uptoRs. 1600 per month. So it is generally included.
Special allowance is fully taxable. It is the balance portion of the CTC.
Bonus is the statutory payment made by the employer to the employee as per Bonus Act.
Provided Fund is also a statutory payment made as per law where Employee & Employer contribution is 12% each of Basic salary +DA+ Retain allowance.
The CTC components differs from company to company. You can also negotiate with a company to include or excluded particular components.
Many of the companies also do tax planning by including certain new allowances or perquisites in the CTC.
Hope you have got the basic idea on how to calculate CTC .