July 2, 2020

Understanding CTC

It is very important to understand this broad and misleading term CTC, to get an idea of what actually money you would be getting in-hand monthly after working for almost 45-50 hrs a week. CTC stands for cost to company, whenever any company visits the campus it always mention the amount in CTC which is the total cost company is spending on you, which is obviously more than what you would get in hand. So, while going through offer letter, look closely about what all is included in the CTC/company’s package.

1.TDS deductions and employee’s PF:

In India, TDS is the tax’s deducted at source that is tax you pay to the government on your salary as a part of income tax. On top of that a PF is deducted every month which too is included in the CTC. Let’s say your salary package is 3.25lpa as CTC. which amounts to 3.25/12=27K . TDS would be 10% of salary. Net salary=27K-2.7K=24.3K. And additional 1K PF i.e 24.3-1=23.3 k monthly.

2. Indirect Benefits:

Majority of the time, the claims of free lunch, free cabs etc are too included in the CTC due to which further some amount is deducted from the CTC every month. So, read the division carefully. Which could be around further 2K each monthly.

3. Direct Benefits

Now in hand is what you get under Direct Benefits-Basic, Dearness Allowance, House Rental Allowance etc. Hence, it is clear that from 3.25 lpa you will get around 21 K in hand. So, be clear of the package, and offer letter!

If you still have any doubt. Please write to us in the comment section. Our team would revert back within 24 hrs.

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