How is CTC Calculated?
CTC (Cost to Company) = Gross Salary + Benefits
1. Basic Salary: It is a fixed amount of money on an employment contract that is mutually determined and provided monthly to an employee for their financial needs.
2. House Rent Allowance: Employee is eligible for this if they are living on rent. It is some part of the complete rent of the place where the employee lives.
3. Bonuses: Performance-based bonuses are also provided to employees in some companies.
4. Stock Options: Stock options mean employee gets the option to buy the company’s share at a predetermined price in the future.
5. Employee’s Benefits: Benefits paid to employees like health insurance, life insurance, retirement benefits, and any other perks the company offers.
6. Provident Fund (PF) and Gratuity: Employer contributions to the Employee Provident Fund (EPF) and gratuity, which is payable upon an employee’s retirement, are also part of the CTC.