Understanding Bonus Calculations: Is My Company's CTC Practice Fair?

Please clarify the calculation of the bonus for me. For example, the take-home salary is $10,000 per month, but it is listed as $12,000 in the Cost To Company (CTC). However, the bonus included in the $12,000 is $2,000. The company, XYZ, gives this bonus every three months. Is this practice correct or incorrect? Kindly explain this to me. Thank you.

Hello,

Every single penny a company is liable or likely to pay you at any point in time due to your employment can be included in the CTC. It includes everything: basic + DA + HRA + LTA + Incentives + Spl. Incentives + PF (both) + Bonus + Ex Gratia. Any component that can be given to the employee is a part of CTC.

Regards,
Anal Shah

The joining bonus is not counted in the CTC for an employee as it is not regular. As it is a one-time benefit, it attracts the fringe benefit under the company's head, so the company may treat it as a one-time cost for talent acquisition.

** These are my views, and I am not very sure that they are accurate.

Yes, that's right.

Joining bonus is not a part of CTC - it is a one-time payment which is given to the employee. This can be mentioned as a clause in the offer letter but need not be added to the CTC.

Hi,

The total cost spent by an employer on an employee in a year is called CTC. We can divide this by 12 to get monthly CTC. Hence, what the XYZ company is practicing is usual.

Thanks