Gross salary, cost to company and take-home salary, are not just different names for salaries. There is a lot of difference between these three, about which we would learn in this guide.
CTC meaning
Cost to company (CTC) is the amount which a company will have to bear on an employee for a specific year. In other words, CTC indicates the cumulative amount a company spends on an employee in a year. Note that the company’s CTC will always be higher than your gross and take-home salaries as it has more components than gross salary or take-home salary.
Components of CTC
- Basic salary
- House rent allowance
- Dearness allowance
- Medical allowance
- Entertainment allowance
- Conveyance allowance
- Other allowances
- Allowance towards mobile, internet, utility bills
- Educational allowance
- Salary arrears
- Remuneration
- Overtime payment
- Performance-lined bonus
- Cash awards
- Gratuity
- Contributions towards Provident Fund (PF)
- Payments of professional tax
- Deductions as income tax
See also: All about City Compensatory Allowance or CCA
CTC calculator
CTC = Direct Benefits + Indirect Benefits + Savings Contributions
| Direct benefits | Indirect benefits | Savings |
| Basic wage | Food coupons | EPF |
| HTA | Loans rated at subsidised rates | Gratuity |
| LTA | Company accommodation | Superannuation benefits |
| Conveyance allowance | Office space rent | |
| Medical allowance | Company car | |
| DA | ||
| Mobile allowance | ||
| PLI | ||
| Special allowance |
What is gross salary?
Your gross salary is the amount before any deductions are made from it. It includes all components of your salary, barring pension fund contributions like EPF, gratuity, etc.
See also: All about TDS on salary
Gross salary components
- Basic salary
- House rent allowance
- Conveyance allowance
- Medical allowance
- Dearness allowance
- Special allowance
- Leave travel allowance
- Allowance towards mobile, internet, utility bills
- Educational allowance
- Salary arrears
- Remuneration
- Overtime payment
- Performance-lined bonus
- Cash awards
Also read: Salary slip format: Everything you need to know
Gross salary calculation
see about Gross salary calculator
Gross Salary = Basic Salary + HRA + other allowances
Take-home salary meaning
Your take-home salary or net salary is the amount that gets credited into your account, once tax is deducted and contributions towards savings like PF and gratuity are made. As a result, it is much lower than your CTC or gross salary.
Take-home salary calculator
Take-home salary = Gross Salary – Income Tax – Public Provident Fund – Professional Tax
Difference Between Gross Salary and Basic Salary
Your salary has several components. The basic salary is that fixed amount which your employer pays you in exchange for your work. Basic salary does not include any fringes and perks like HRA, LTA, insurance, bonus, etc. It also does not include any tax deductions. Your gross salary on the other hand is the salary amount before any deductions. Gross salary includes all components of your salary, barring pension fund contributions like EPF, gratuity, etc.
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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