Salary Confusion: Can You Explain the Difference Between Gross Salary and CTC?

Hi guys,

Can someone tell me the difference between gross salary and CTC? Please help.

Regards,
Santosh Verma
(9886609605)

Gross Salary is the salary in which annual benefits are not included, and PF is deducted. Once PF is deducted, it becomes the net salary. CTC is the annual component that includes Gross Salary plus Annual Benefits.

In summary:
CTC: Annual Gross Salary + Annual Benefits.
Gross Salary: Gross Salary - PF + Net Salary (In Hand).

Rashmi

Thanks a lot, Rashmi.

Can you please elaborate on your answer? Are you talking about the annual bonus that's not included in the gross salary? If yes, what other components are there in the CTC that are not in the gross?

Please reply.

Regards,
Santosh Verma
(9886609605)

Dear Santhosh,

Gross salary includes Basic+HRA+DA+employer contribution of PF+conveyance+other allowances. Deductions are Employee contribution(PF)+prof tax+ESI. Nett Salary (Take Home Salary) = Gross salary - Deductions.

Regards,
Lavanya :)

Hi,

Salary has been divided into two parts like Earnings and deductions.

Gross Salary = Earnings + deductions. The remaining amount is the net salary.

CTC is the Annual Cost to the Company, which includes everything you pay to employees such as components of salary, Bonus, LTA, or any other facilities in cash. Therefore, there may be a significant difference between Gross salary and CTC.

Generally, sales and marketing people have more facilities and allowances than their salary.

Thank you,
Shilpa

Hi,

To my knowledge, the gross salary includes components such as basic pay, DA (Dearness Allowance), special allowances, HRA (House Rent Allowance), employer's contribution to PF (Provident Fund), ESI (Employee State Insurance), gratuity, and other monthly emoluments. On the other hand, CTC (Cost to Company) comprises Gross Salary, bonuses, medical benefits, LTA (Leave Travel Allowance), and other annual emoluments paid yearly.

In simpler terms:
Gross Salary = basic pay + DA + special allowances + HRA + CCA + other monthly emoluments
CTC = Gross Salary + Bonus + Medical + LTA + other annual emoluments paid annually

Regards,
V. Nanda Kumar

Hello,

I may not know the technicality of it, but I will try to explain it in layman's terms. Gross salary, as everyone said, is your basic allowance + DA. CTC = Cost to the company. For example, if a company declares that your salary is up to 3.5 lakh p.a., and CTC is included, it means that even the cost of the chair, table, and computer is included. The others are right with their views; this is my knowledge.

Let me know if I am wrong.

Regards, Kinjal Pandit

Hi Santosh,

CTC means Cost to Company, i.e., what cost the company is bearing or spending on you in terms of money. It includes all cash benefits and reimbursements, such as fringe benefits, etc. Now, it depends on the company what to include in CTC.

There can be club membership, etc., included in CTC, but this can't be part of your Gross Salary.

Therefore, in general, CTC = Gross Salary + Employer share of PF + Employer Share of Gratuity + Other Benefits over & above Salary.

Now, Gross Salary is what you get per month in your payslip before deducting your share for PF & TDS. After deducting your share of PF & TDS from Gross salary, the remaining amount is Net Salary, i.e., take-home pay.

This Gross salary is divided into many allowances, whatever they are named. They can be LTA, HRA, DA, Basic, Lunch Allowance, etc.

Gross Salary breakup must have the following to save the maximum Income Tax:

Basic, HRA, LTA, Transport Allowance, Medi. Reimbursement, Children Education Allowance.

Therefore, always ask for the take-home figure when joining a new organization.

Sachin Yadav
9869355472
EPFO
Mumbai

Dear Santosh,

CTC (Cost to Company) itself defines the concept, i.e., the company will not bear any expenses beyond that figure. It includes all the annual benefits and perks except reimbursement of expenses like conveyance on official travel and mobile. Some firms at the lower level include even these figures. The main difference is of Employers' and Employees' PF part. Gross salary (including all annual benefits) + Employers' PF = CTC.

Hope it answers your query.

Sandeep Sinha

CTC means the total cost to the company on behalf of the resource, expressed and hidden. It includes, besides the gross salary, the cost of all welfare amenities like transport, cafeteria facilities, etc., bonus, incentives, cost of gift vouchers, gratuity, etc.

Gross salary refers to the monthly total amount payable in respect of an employee, including the employer's contribution to PF.

Vincent

Dear Santosh,

I hope your query will be sorted out by the answers provided by many colleagues.

I am also sharing my opinion below in the form of a Salary Slip.

Earnings | Deductions
- BA - 100 | PF - 12
- DA - 50 | ESI - 4
- HRA - 30 | ADV. - 0
- Conv. - 20
- SP.Al. - 20
- Total - 220 | Total - 16

Net Pay: 204/- (Rs. Two Hundred four only)

The Rs.220/- total earnings in a month are called GROSS SALARY.

The Rs.204/- after deductions is called NET SALARY.

Now, CTC = Cost to Company
- Rs. 220/- Gross Salary
- Add Rs. 10/- Bonus
- Add Rs. 10/- LTA
- Add Rs. 10/- Medical
- Add Rs. 00/- Any other, whatever the company gives in cash, either annually, half-yearly, or quarterly EXCEPT subsidies in canteen, any Long-term award, or any gifts. It depends on the company's policy.

It seems that some organizations include the cost of facilities or subsidies in CTC, while others do not include them to calculate CTC. It depends on the Company.

I hope this serves your purpose.

Regards,

L.C. Pal

Hi,

Please find below information on CTC.

What is CTC?
CTC (Cost To Company): It includes Employer contribution to PF (12%).
For example, if CTC is Rs. 8000, then the Employer Contribution to PF would be 12% of CTC, i.e., 8000 * 12% = 960.

What is Gross Salary?
Gross Salary is calculated as CTC minus Employer Contribution to PF, which means 8000 - 960 = 7040.

What is Take-Home Salary?
To calculate Take-Home Salary, deduct Employee Contribution to PF (12%) and any other deductions from the Gross Salary.
Given:
Gross Salary: 7040
Employee contribution to PF (12%): 960
Other Deductions:
- Mobile
- Food
- Cab

Warm Regards,
Maniksing

Gross salary is the monthly earnings of the employee, and deductions (PF, ESI, PT, loans, advances, etc.) will be subtracted from the gross salary.

CTC refers to the Cost to the Company for an employee, which includes the gross salary and annual benefits.

Vamsi.

Hi,

Gross salary is reflected in your payslip (i.e., excluding deductions like P.F.). Net salary is calculated as Gross salary minus P.F. deduction. CTC (Cost to Company) includes Gross salary and other benefits (such as incentives which are not reflected in the payslip).

Baskaran v

Hi all,

About CTC, I think it will be clear to you if explained by the bifurcations given in the Salary Payslip:

Total Earnings | Deductions
Basic 4000 | PF 480
HRA 1000 | PT 80
Allowances 1520
Medical Allowance 500
LTA 500

Total Earnings: 7520
Total Deductions: 560

Therefore, Gross is 7520 - Deductions 560 = 6960 Net (Carry Home). In this case, the CTC for this person is 8000 per month. I hope this clears your doubt.

Regards,
Satya

Dear Mr. Santosh Verma,

Bangalore

What's the difference between gross salary and CTC? Most of our friends are saying a lot, if you are not satisfied.

By simple

Gross Salary = Total (Basic + Special Allowances + DA + CCA + HRA + other monthly emoluments (without Subsidies, Gifts)) CTC = Total (Gross Salary + Bonus + Medical Allowance + LTA + other annual emoluments paid by the company annually)

Thanks & regards, G. Amaran.

Cuddalore - Tamil Nadu.

Daily allowance given to sales and field staff for each working day... Are these allowances included in CTC? Urgent.

- Prashant

If the CTC of an employee is 4 Lac per annum, what will be the gross salary as well as the net salary per month? Can anybody explain to me the salary breakup of 4 lac per annum in Excel format? Please email me the information at my ID: arasingh08@gmail.com.

Hi,

Gross salary is the monthly salary before any deductions, plus perks, i.e., the amount received monthly from the employers.

CTC is the cost to be incurred by the employer on the employee, which will not be paid to the employee. For example, 4.75% ESIC contribution, 1.61% of EPF admin charges, transportation, gratuity, leave encashment, etc.

Regards,
zsd

Certainly! Here is the corrected version of the user's input:

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Do you have any case law on this matter where the Honorable Supreme Court has stated that the gross salary includes the PF and ESI share of the employer? Kindly provide the same as it is urgently required.

Gross salary is the part of CTC. CTC stands for Cost to Company, which means the cost of an employee for a company.

Sumit

Gross salary is the amount that excludes the contributions of the employer and employee (ESI, PF, etc.).

Cost To Company is the total amount to pay that includes both contributions.

Can someone kindly provide a Supreme Court or High Court citation whereby it has been held that the gross salary shall include the PF and ESI share of the employer only.