CTC and Payslip Components
CTC is an internal calculation. In fact, it is used only for negotiation. I come across many postings here asking whether Bonus or PF can be shown in the payslip. Then why not Gratuity? Why not other benefits?
Step 1
Basic plus DA plus HRA + Conveyance + other allowances payable every month.
Step 2
Monthly incentives and monthly reimbursements.
Step 3
Annual Payments like LTA, Medical, Performance Pay, and Bonus.
Step 4
Employers' contribution towards PF, ESI, etc., and gratuity. Any amount payable towards superannuation.
Step 5
Cost of Car/Cost of interest on Loans.
All these put together form CTC. There is no legal definition for CTC. Some companies even add Canteen subsidy, travel subsidy, Accident insurance, etc. In senior positions, some companies add vacation cost to CTC.
In a payslip, which is given every month, one needs to show the following only:
Step 1: Related items which form monthly earnings.
Step 2: Related items which form monthly reimbursements.
Step 4: Related deductions plus other deductions like IT, Professional Tax, loan recovery, etc.
No other items should be shown in the payslip. I also do not understand what purpose it serves.