Understanding Salary Breakdown: How Is Your Cost to Company Calculated?

SALARY DETAILS

Per Annum
Per Monthly

Gross Salary
3,500 BASIC
2,100 HRA
315 CONVEYANCE
315 CITY COMPENSATION ALLOWANCE
315 MEDICAL ALLOWANCE
462 OTHER ALLOWANCE

Gross Salary
3,507
PF Employees Contribution
252
ESI
61
PT
120
MLWF (IF 3500<0, "6" or 3500>0, "12")
2 P.M.

Net Salary
2,994
PF Employer Contribution
252
ESI Employer Contribution
166
MLWF Employer Contribution
6
BONUS
174.93
GRATUITY

Current Cost to the Company
4,274

Hi Asmita,

This is Pushpak from Hyderabad. Could you please make your calculations clearer without putting them in a single line?

Hi,

I'm Ila from Ahmedabad. I'm hereby attaching the salary calculation sheet.

Thanks,
Ila

In calculating the CTC, the following are also considered:

1. Allowances like:
a. Children education allowances, hostel subsidy, etc.
b. Newspaper/periodical allowances
c. Washing allowances
d. Tea/coffee/refreshment reimbursement

2. If the company provides housing and vehicle advances, it might have lower interest rates (than market/external bank rates). This interest advantage is considered as income and therefore included in the CTC.

3. Medical allowances/insurances and related expenses. Each company has specific guidelines for this. Some have no limit, some set it at Rs. 15,000 and anything above is taxable, while others may have different structures for this benefit.

4. In addition to bonuses, performance-linked incentives (calculated based on your reviewer's rating in your appraisal) are also factored into the CTC.

5. Leave travel allowances.

6. Regular uniforms/boiler suits/safety shoes/regular shoes provided by the company are all taken into account.

7. Similar to housing and vehicle advances, some companies have schemes offering furniture/household items and PCs/laptops on a hire basis, where employees may need to buy them back after a certain period. The interest advantages here are also considered.

8. Some companies provide expenses for maintenance/upgrades of the above items, which are also included in the CTC.

There may be other considerations beyond these. Can anyone provide a comprehensive breakdown of a typical CTC? I am in need of one urgently. Thank you for your help.

Regards,
Ayon

Hi, I am Lakshmanan from Chennai. Could you please attach the calculation for Excel Sheet.

Regards,
Lakshmanan M
9840344092

Hi Ila,

I am Ila from Ahmedabad. I am hereby attaching the salary calculation sheet.

Thanks, Ila.

Hi Ila,

You have made it very easy to calculate the salary. However, I would suggest that the Basic should be 40% of Gross, HRA should be 40% of Basic, and other things do not matter to me.

Dear Ayon,

Thanks for the CTC details. Are performance pay or incentives also part of CTC? If yes, is it possible that an employee will not receive a certain amount if they have not performed well?

Is gratuity also included in CTC? According to the Gratuity Act, it is payable only after 5 years, right?

Please reply.

CHINMAY
EXECUTIVE - HR
SAPAT INTERNATIONAL PVT. LTD.