What is the full form of CTC

CTC: Cost To Company

CTC stands for Cost To Company. It is the annual salary package of an employee. It indicates the total expenses that a company/organization spends on an employee in a year. Now a days, most of the companies offer their salary in the form of CTC.

CTC is not the actual salary of the employee. It also includes the facilities given to the employee during the service period.

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  1. CTC = GROSS salary + incentives + other expenses

It clearly means that CTC is not only the salary, but it also includes many things like meal, medical facilities, phone bill, house facilities, travel allowance etc. Some companies especially large investment banks also add office space rent in the CTC package. Furthermore, if your company provides you accommodation, car, driver etc, the value of these facilities will be included in your CTC.

So, some of the components of your CTC are not translated into actual take-home cash and what you get in hand always remains less than your CTC.

Let’s take an example to understand it well:

Component of salary (per annum) Amount
Basic salary 480,000
Dearness allowance 48,000
Conveyance allowance 12,000
Entertainment allowance 12,000
Overtime allowance 12,000
Medical reimbursements 15,000
House rent allowance 96,000
Gross salary 6,75,000

Benefits may be change from company to company. Let’s take an example of benefits for the above employee are:

medical insurance 2000
provident fund (12% of basic) 57,600 (12% of 4,80,000)
laptop 50000
total benefits 109600

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  1. Cost to Company (CTC) =Gross Salary + Benefits
  1. 7,84,600 = 6,75,000 + 109600