Understanding CTC vs. Gross Salary: Can Someone Explain the Difference Clearly?

Dear All,

Can anyone please let me know the difference between CTC and gross salary in detail? It's very confusing.

Regards,
Alka

Dear Alka,

CTC (Cost to Company) means every single penny spent by the company on the employee. For example, if you have a coffee in your office, the cost of it will be added to your remuneration. Similarly, transportation, gratuity, and other benefits are included. On the other hand, Gross salary includes net salary + PF.

Please refer to the attachment for more information.

Suggestion: Always negotiate your salary based on Gross rather than CTC.

Dear Alka,

CTC (Cost to Company) means every single penny spent by the company on the employee, i.e., if you even have a coffee in your office, the cost of it will be added to your remuneration. Likewise, transportation, gratuity, and other benefits are included, whereas Gross salary includes net salary + PF. Please see the attachment for reference.

Suggestion: Always negotiate your salary based on Gross rather than on CTC.

Gross Salary means: Basic + DA/HRA + Conv. PF is deducted from Gross Salary. Net Salary: Gross salary - PF, advance, etc.

MANOKAVIN

Dear Alka,

CTC means Cost to the Company, which includes all the cash benefits you receive from the company per annum (inclusive of statutory benefits). On the other hand, Gross refers to the Monthly Gross Salary, which includes your Provident Fund contributions and Professional Tax.

Thank you.

Alka,

Gross Salary consists of all earning components, such as BASIC, HRA, DA, CCA, and other allowances.

Net Salary is Gross Salary LESS deductions, such as PF, ESIS, Professional Tax, TDS, etc.

Cost to company is Gross Salary PLUS contributions such as company's contribution to PF, ESIC, Gratuity, Superannuation, medical insurance, etc., PLUS the value of perquisites, such as Car, House, and other non-cash benefits.

Archana

In this, I am having that doubt in the Payroll process. Please clarify.

An employee is getting a salary of Rs. 10,000 per month (Basic 4000, DA 1500, HRA 1200, Perks 1300, Med Allo 1000, Other Allo 1000). Here, the normal working days are 26 per month, and we have taken into account working days.

If the employee's working days are 10, then normally we can calculate (10000/26)*10 (if there are no Leave Benefits & No other Benefits), right?

But my question is how can we break up the 10-day salary? How do we deduct the LOP amount from the above-mentioned heads? How much do we have to take for PF? Could you clarify any one, please?

Regards, Sukumar 9842023923