Some basic terms related to CTC
Here are some terms that are related to the CTC i.e. Cost to Company. these are explained below:
Gross Salary
Gross salary refers to the total amount paid to any employee before making any deduction from it including tax deduction. Gross salary includes basic salary, House rent Allowance, provident fund, special allowances such as travel, food and attire, Bonus, and taxes. Gross salary is calculated by adding all allowances, including basic salary before making any deduction from it.
Basic Salary
The basic salary is the total amount received by any employee in hand. In simple terms, it is the total amount that is received in a bank account, or in the form of cash. The basic salary is less when compared to CTC. In the ideal case, the basic salary of any employee should be average of gross salary, that is, it should never be very less nor closer to gross salary. It can be understood through an example, let us suppose that the gross salary of any employee is 1000 INR then in ideal case his basic salary should be 350-400. Because when it is closer to 900 then he/she has to pay a high amount of tax . There is a very tricky difference between CTC and in-hand Salary which is salary received per month. CTC includes many things such as provident fund, gratuity, House Rent Allowance (HRA), medical allowance, special allowance, health and life insurance, sometimes food expenses also, special corporate health insurance, perks as well.
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