Understanding CTC, Gross, and Net: How Are They Calculated and Do They Vary by Company?

Good evening, everyone.

Please let me know what the exact meanings of CTC, Gross, and Net are. What is the method of calculating them? Does it vary from company to company, or is the calculation fixed?

Sana

CTC - Means Cost to Company - It calculates the same method in all companies.

Gross - pay without any deductions for your worked days and CL.

NET: Gross minus deductions.

Hi Sana,

The contents of the salary breakup are as below. You can prepare it according to your convenience. HRA would be 50% or 60% of the basic salary.

- Basic
- HRA
- TA
- Other Allowance
- Mobile Reimbursement per month
- Gross Per Month: Sum of all the above
- Gross Per Annum: 12*Gross/Month
- PF Contribution: 12% of Basic/Annum
- ESI Contribution: 4.75% of Gross/Annum
- Medical: The mediclaim facility is provided to employees not covered under ESI, as the maximum ceiling for ESI is 10,000/month. Amounts exceeding this will be covered under Mediclaim or as per company policy.
- Ex-Gratia/Bonus: A fixed bonus amount
- Annual Fixed Gross Cost: Gross/Annum + Ex-gratia
- Annual Total Cost: AFGC + PF + ESIC
- Annual total cost is also referred to as CTC.

I hope this clarifies everything for you. Please feel free to ask if you have any queries.

Regards,
Amit Seth.

Dear Sana,

We have to deduct PF, ESI, and Professional Tax on Gross salary. If he comes under Income Tax, that deduction has to be made.

This is for your information.

Regards,
VENKAT
HR MANAGER

Hi Sana,

We can deduct the following from the employee's gross salary:
1. 12% PF of Monthly basic earnings.
2. 1.75% ESIC of monthly gross earnings + Overtime + Incentive (if covered by ESIC).
3. P.T. if applicable in your state.
4. Advance, if any.
5. Penalty/Damages, etc.

Regards,
Jiten.

Hi everybody,

I would like to put my query as below. My query is related to the rate of the minimum wage. As per the minimum wage for skilled labor under shops and establishments is 2500 (assumption). As we know that the minimum wage is nothing but Basic + D.A. So, while I do the structure, should I consider the Basic as the minimum wage or the Gross as the minimum wage? I hope my question is clear. Can anybody help with the salary structure if the minimum wage is Rs. 2500 and CTC should be around 3300?

Regards,