Cost to Company is a buzz word to describe about the payment structure of a company including all benefits. But it is denoted in different way from the perspective of management. A fresher can ask and clarify the human resource personnel at the time of salary negotiation it self.
What is CTC?
For the Company: Cost to company is a term which essentially implies the amount of expenses the company will spend on an employee in a particular year. What may be an expense for the company need not necessarily be salary for the employee.
For employees: Cost to company is an amount projected by the company as salary but is never what is actually received by the employee in cash.
For the Finance Manager: It is the total cost incurred to hire, maintain, retain the employees and may also include a part of overhead cost allocation.
- Recruitment Cost
- Base salary
- Office Space
CTC includes various components like:
Salary: It includes Basic, DA, HRA, Allowances
Reimbursements: It includes bonus, incentives, reimbursement of conveyance/medical/telephone/, benefits extended through various schemes like housing/vehicle/furniture/ Air-conditioners etc.
Contributions: I t includes the benefits offered by the company like PF, Super Annuation, Gratuity, Medical Insurance, etc. Some companies also offer Leave Encashment, Stock Option Plans and Non cash concessions.
Tax Benefit: It includes only Stock Options.
What is the difference between CTC & Take Home Salary ?
Most of us ot aware of CTC and take home salary and most people confuse about the both. This confusion takes place even in experinced employees also.