The CTC has got direct bearing on Indian Accounting Standard 19 issued by the Instt. of Chartered Accountants/Govt of India which deals with Employee related costs. Every employer should account for all employee related expenses/cost relevant to the year in the respective year’s accounts, whether paid or not but on accrual basis in accordance with the AS-19. On the same principle the CTC also being computed in many of the firms. Ofcourse various methodology is being followed by the employers as per their own past practices, HR policies, pattern generally followed by other cos in the same field. It is possible they show a few items in CTC exchanged with the candidates which may vary from what is accounted in their accounts as “Employees’ Benefits”. It’s also possible many a time varies from person to person. Since CTC concept is not present and mandatory as per Payment of Wages Act etc no one can argue what is IN and what is kept OUTside the ambit of CTC. The extract from the AS-19 is reproduced here for the benefit of members as a ready ref. Detailed AS is attached.
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Indian Accounting Standard (Ind AS) 19 Employee Benefits
5) Employee benefits include:
(a) short-term employee benefits, such as the following, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services: (i) wages, salaries and social security contributions;
(ii) paid annual leave and paid sick leave;
(iii) profit-sharing and bonuses; and
(iv) non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees;
(b) post-employment benefits, such as the following:
(i) retirement benefits (eg pensions and lump sum payments on retirement); and
(ii) other post-employment benefits, such as post-employment life insurance and postemployment medical care;
(c) other long-term employee benefits, such as the following:
(i) long-term paid absences such as long-service leave or sabbatical leave;
(ii) jubilee or other long-service benefits; and (iii) long-term disability benefits; and
(d) termination benefits.
6) Employee benefits include benefits provided either to employees or to their dependants or beneficiaries and may be settled by payments (or the provision of goods or services) made either directly to the employees, to their spouses, children or other dependants or to others, such as insurance companies.
7) An employee may provide services to an entity on a full-time, part-time, permanent, casual or temporary basis. For the purpose of this Standard, employees include directors and other management personnel.
Definitions:
8) The following terms are used in this Standard with the meanings specified:
Definitions of employee benefits Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.
Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service.
Post-employment benefits are employee benefits (other than termination benefits and shortterm employee benefits) that are payable after the completion of employment.
Other long-term employee benefits are all employee benefits other than short-term employee benefits, post-employment benefits and termination benefits.
Termination benefits are employee benefits provided in exchange for the termination of an employee’s employment as a result of either:
(a) an entity’s decision to terminate an employee’s employment before the normal retirement date; or (b) an employee’s decision to accept an offer of benefits in exchange for the termination of employment. Xxxxxxxx xxxxxxxxxxxxxxxxxx