Dear friends participating in this discussion,
Why such a hype about CTC as if it is going to create some tangible and intangible advantage to both labor and management in the matter of compensation management?
CTC is nothing more than an accounting expression of the total annual cost incurred by the company per employee inclusive of wages/salary plus fringe benefits.It is particularly used by some Asian Transnational Corporations to lure the employees about their compensation package.
In short CTC = Direct benefits + Indirect benefits + Savings. Direct benefits include basic, dearness allowance,HRA, medical allowance, LTA,CCA, conveyance allowance, incentives, bonus etc. Indirect benefits are interest free loans, food coupons or subsidised meals,medical insurance premium paid by the employer, company-paid accommodation and the like whereas "Savings" denote statutory contributions paid by the employer to EPFand Gratuity Fund and other superannuation benefits payable under the contract of employment.
Therefore, it is to be distinguished from 'Gross Salary' which simply denotes the actual total salary before deductions. The above mentioned Indirect Benefits are not payable in cash to the employee.Similarly, the accumulations of EPF and Gratuity are payable only on the termination of employment and that too gratuity being an out and out employer's statutory liability and its payment is subject to certain conditions and ceiling only.
If you critically analyse the concept of CTC, you can easily understand that it is not a new concept in the matter of salary and wage administration but only the age old practice reflected with catchy nomenclature. In the recruitment advertisements and offer letters, the expression of compensation package in terms of CTC simply makes the offer more attractive for CTC is variable in due course with service.