Understanding "Cost to Company" (CTC): Can Anyone Explain It Clearly?

Dear Sir/Madam,

Could someone help me with a proper definition to define "cost to company"?

Hi Keerti,

CTC is defined as the total cost incurred by the company on an employee. Obvious expenses include Monthly Salary, Bonus, and the Employer's contribution towards the employee's PF. Additionally, gratuity, which the company is required to pay to an employee who has served for at least 5 years at half month's salary for each completed year of service, can be added to the CTC. To include this in the CTC, one may divide 2 and a half times the salary by 60 and add it to the monthly CTC. The management may also include expenses like transportation, telephone bills, subsidized food, etc., in the list of costs that the company incurs on the employee.

Hope that clarifies.

Regards,
Naresh Taneja

Hi Keerti,

Please find attached the Excel file. It details the CTC (Cost to Company) and is also a useful salary calculator. As mentioned by Naresh, it's just a term given to the package offered by the employer to the employee. It also helps the employer to keep track of the actual amount being spent on an employee, making budgeting easier. Nowadays, with many variable parameters being introduced to CTC, it becomes a comprehensive package that both the employer and the employee can proudly declare.

Regards,
AJ