Understanding CTC: Does It Include Employer PF and ESI Contributions? How Is TDS Deducted?

Hi Everybody!

This is Partho. I want to know about the detailed CTC components. Is the CTC figure reflected on the offer letter inclusive of the PF (Employer contribution) and ESI (Employer contribution) along with the Employee? What is the process for TDS deduction? Please let me know as soon as possible.

Thanks,
Partho

Hi Partho,

The components of the salary breakup may be as below, and you can prepare it according to your own suitability. HRA would be 40 to 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 provided to employees who are 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 amount as a bonus

Annual Fixed Gross Cost = Gross/Annum + Ex-gratia

Annual Total Cost = AFGC + PF + ESIC

Annual total cost is also called CTC.

Yes, PF and ESI contributions from the employer side are included in the CTC.

As per government tax rules, separate ceilings have been set for both genders:

- For Males: Those earning more than 1.1 lakhs/annum have to pay taxes.
- For Females: The threshold is 1.5 lakhs/annum.

I hope this information helps you in preparing the same on your end.

Regards,

Amit Seth.