Confused About CTC and Salary Negotiation? How to Clarify with HR When Numbers Don't Add Up

I am working with a startup. For startups, there is not much documentation. Now my take-home amount is 30,000, that's the amount I get in my bank account, plus I get cash reimbursement for petrol and mobile (there is no paper trail for this). Now I have a few questions:

1. What is my CTC?

2. How should I negotiate with a company HR? I applied at a company, and the HR is saying I am getting 360,000 as CTC, and they have some arcane rule that the hike cannot be more than 25%. So now he is quoting a figure of 450,000.

I am not able to understand this because I checked some of the salary break-up calculators, and it shows that if my CTC is 360,000, then my in-hand would be in the range of 27,000-28,000, which is not the case here. How should I bring this point to the HR's understanding?

Look forward to your responses.

Understanding CTC and Take-Home Salary

CTC is the total amount you would receive before deductions. It's the complete amount offered to you by the company in exchange for your services. The yearly CTC, when divided by 12, is not what your monthly take-home would be, for the obvious reasons that you have already discovered.

The calculation that shows Rs. 27,000 is as per the normal calculation, which includes deductions such as Professional tax, PF, and Income tax.

Your current employer is most probably not deducting any amount. Your monthly take-home is the lump sum with the reimbursement, over and above it. This is not how salary is calculated in most firms. In fact, your new employer should be able to identify this.

You need to confide in the HR of the new employer about this entire absence of deduction by your current employer and support it with the bank statements showing the transferred amount. It may not offer the details of the amount paid; however, that explains your case. Please find a clearer understanding of what the take-home amount would be in your new salary structure.

Rs. 45,000 will have deductions and may have further conditions such as medical bills to be presented for the amount to be reimbursed.

The same goes for travel bills. Please clearly understand if you would be given any per diem before the journey or if it would be reimbursed only once you submit the bills.

Mobile and other expenses, if offered, might follow the same method.

These details are important as you may need to track your expenses and manage your savings.

Wish you all the very best!

As per my understanding, your monthly CTC is ₹30,000. CTC means the total cost to the company incurred on an employee by the company, and the net salary is what you get in your account/hand after necessary/obligatory deductions like PF, Professional Tax, and income tax. If you are receiving 30k in your account, it means your employer is not deducting anything from your salary, which is a wrong practice.

The mobile and petrol reimbursement is a variable allowance paid to an employee by the company in addition to the CTC. Please bring this matter to HR's attention so that it can be rectified.

Understanding Your Total Compensation Package

Please calculate the total value of all the perks, benefits, and other non-cash benefits applicable to you, including:

- BASIC
- D.A
- HRA
- CANTEEN (FOOD)
- CONVEYANCE
- MEDICAL
- INSURANCE
- ENTERTAINMENT
- PAID VACATION
- P.F CONTRIBUTION BY COMPANY
- GRATUITY CONTRIBUTION
- LEAVE ENCASHMENT
- OFFICE WARE ALLOWANCE
- FREE ACCOMMODATION
- FREE EDUCATION
- EDUCATION ALLOWANCE
- INCENTIVES
- GIFTS
- BONUS
- CASH AWARDS, etc.

This is your CTC. Please note that this list is indicative, and there may be other benefits available to you. In negotiations, a traditional X% rise is one approach. However, a more scientific approach considers the Market Value of the Role vis-a-vis the competence of the candidate.

Regards,
Shailesh Parikh
Gujarat, India
[Phone Number Removed For Privacy Reasons]

As mentioned by (Cite Contribution) and Meenakshi, your current employer is not deducting the necessary amounts from your salary as required by law. If your company is a startup with not more than 15 employees, the employer is not obligated to pay PF. However, PT (Profession Tax) and income tax deductions are always mandatory for registered employees.

Therefore, it is evident that your current CTC is only Rs. 3,60,000 per annum, and any new employer will offer an increase considering this amount. With a 25% hike, your new salary would be Rs. 4,90,000. Ensure the new HR understands this by providing evidence from your bank statements.

Regards,
Sudhindra.