Hr Professional
Rajat Joshi
Hr Consulting ,trainer -creative Thinking
Hr Executive
Hr Executive
Rajnish Borah
Hr Leader - Syntel Inc
Proprietor - R N I Associates

How do you calculate cost to the company?What are the components we need to include when calculating CTC?
From India, Bangalore
To the best of my knowledge the components to include in the CTC are as follows...
1. Basic
4.E.A( Educational Allowance)
7.Leave Encashment.
9.PF subscription of the employer share.
10.cost of any housing or other accomodations provided by the employer.
11.Cost for Vehicle provided or vehicle allowance.
12.Any other aminities or services provided by the employer.
K.Antony Prakash.
HR- Manager.

From India, Madras
Dear Hema
With due respects to Mr.Antony's answer, you can also add
* Overheads/Loans taken by the employer on the employee transfer
* Insurance (Group)
Mr.Antony, can you please suggest me if we can add cost of training be added to CTC?

From India, Pune
Hi Hema.
To my knowledge, we have to include all the expenses to calculate the CTC of an employee.
1. All the components of the salary.
2. All the perks that are being given for the candidate (i.e) - bonus, incentives, reimbursement of medical/telephone/petrol, benefits extended thro' various schemes like housing/vehicle/furniture/ A/C/ etc....
3. All the contributions that the company makes for the employees like PF,SUPER ANNUATION, GRATUITY,MEDICAL INSURANCE, ETC. should also be included in calculating the CTC of an employee.

Hi Suresh,
Warm regards, are u sure that, "GRATUITY" can be included in the CTC?
Because we are not providing gratuity to all.Those who are render service of five years and above only eligible to recieve the gratuity.So think that gratuity may not be a component of CTC.
Antony Prakash. K.

From India, Madras
While it is true that gratuity is payable only on completing a certain min no. of yrs of service, the employer has still to make a provision each year for the eventual/contingent payment. The provison made is usually @ 12% of a year's Basic+DA. This represents a cost to the co. Likewise, @ a chosen rate of the Basic sal, if contributions are made by employer towards purchase of LIC annuities at each year-end under an internal Superannuation Pension fund scheme, then this too is a CTC component, even tho' there may be a qualifying pd. of service or other conditions of eligibility.

CTC is the concept primrilystarted with the American companies. Different parameters are used by different companies. However most comonly used items under the CTC is what the company spents directly on the employess excluding the cost of infrastructure (space, PC, aircoditoning, training etc)
It includes the salary directly paid to the employees, the benefits directly attriwhere company make a contributions like Provident Fund, Pension funds ( vary from country to country) Medical insurance premium, life insurance premium, cost of loans given to the employee ( some company even include the cost of the loan cost the employee is entitled but not taken) telephone expenses for mobile and home line.
Benefits offered for visiting the home country or hometown etc

From India, Delhi
Dear Hema,
Besides all these components listed by our friends. You can also include the value of any facility provided by the employer, which might include, FRP, LOANS, GPA, HOUSEHOLD POLICY, MEDILAIM etc.
Also Hard and soft furnishing etc, which i feel some one has already mentioned as perks.
Gaurav Sharma
New Delhi, India

From India,
Thanks for the valuable input. Could you also share what kind of compensation packages are currently best for the IT industry?? I am facing a huge challenge here farming the most tax friendly package for new hires.

From India, Delhi
Hi Suresh, Will performance incentive(peformance based) is covered in CTC?? Regards Narasimman HR
From India, Madras

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