CTC or Cost to Company is the total amount that a company spends (directly or indirectly) on an employee. It refers to the total salary package of the employee. CTC is inclusive of monthly components such as basic pay, various allowances, reimbursements, etc. and annual components such as gratuity, annual variable pay, annual bonus, etc.
CTC is never equal to the amount of take-home salary of the employee. There are many components in the CTC that one does not receive as part of take-home salary.
CTC = Gross Salary + PF + Gratuity
Gratuity
Gratuity is the part of the salary that is received by an employee from the employer for the services offered by the employee upon him or her leaving the job.
Though an employee can receive the gratuity amount only after 5 years, it will be deducted by the employer every year and hence it will get deducted from your CTC.
Gross salary
Gross salary is the amount calculated by adding up one's basic salary and allowances, before deduction of taxes and other deductions. It includes bonuses, over-time pay, holiday pay, and other differentials.
Gross Salary = Basic Salary + HRA + Other Allowances